02517.eit.2017.i.gb46 decision 15/2017 of the governing ... · knowledge and innovation communities...

02517.EIT.2017.I.GB46

DECISION 15/2017

OF THE GOVERNING BOARD OF

THE EUROPEAN INSTITUTE OF INNOVATION AND TECHNOLOGY (EIT)

ON THE ASSESSMENT AND ADOPTION OF THE 2016 ANNUAL ACTIVITY REPORT OF THE AUTHORISING OFFICER OF THE

EUROPEAN INSTITUTE OF INNOVATION AND TECHNOLOGY

THE GOVERNING BOARD OF THE EUROPEAN INSTITUTE OF INNOVATION AND TECHNOLOGY,

Having regard to Regulation (EC) No 294/2008 of the European Parliament and of the Council of 11 March 2008

establishing the European Institute of Innovation and Technology,1 (hereinafter referred to as the EIT , as amended

by Regulation (EU) No 1292/2013 of the European Parliament and of the Council of 11 December 20132 (hereinafter

referred to as the “EIT Regulation ), and in particular Section 2 (a) and Section 4 (3) (c) of the Statutes annexed to

the EIT Regulation;

Having regard to Commission Delegated Regulation (EU) No 1271/2013 of 30 September 2013 on the framework

financial regulation for the bodies referred to in Article 208 of Regulation (EU, Euratom) No 966/2012 of the

European Parliament and of the Council3, and in particular Article 47(1) thereof;

Having regard to the Decision of the Governing Board of the EIT of 27 December 2013 on adopting the Financial

Regulation for the European Institute of Innovation and Technology,4 as amended by Decision 6/2015 of the

Governing Board of the EIT of 5 March 20155 (hereinafter referred to as the “EIT Financial ‘egulation , and in

particular Article 47(1) thereof;

Having regard to the Annual Activity Report of the Authorising Officer in respect of the year 2016;

WHEREAS

(1) The authorising officer shall report to the Governing Board on the performance of his duties in a form of a

consolidated annual activity report pursuant to Article 47 of the EIT Financial Regulation;

(2) The consolidated annual activity report shall be submitted to the Governing Board for the assessment

pursuant to Article 47 of the EIT Financial Regulation;

(3) The Governing Board shall adopt the annual activity report of the European Institute of Innovation and

Technology based on the draft presented by the Director pursuant to Section 2 of the Statutes annexed to

the EIT Regulation;

1 OJ L97 of 09.04.2008, p. 1. 2 OJ L347 of 20.12.2013, p. 174. 3 OJ L328 of 07.12.2013, p. 42. 4 01364.EIT.2014.I. 5 00101.EIT.2015.I.GB34.

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(4) “No later than Jul each ear the consolidated annual acti it report together ith its assess ent shall be sent by the governing board to the Court of Auditors, to the Commission, to the European Parliament

and the Council“ - pursuant to Article 47 of the EIT Financial Regulation;

(5) On its 38th Governing Board meeting of 3 December 2015, the EIT Governing Board welcomed the

suggestion from the Audit Committee to give its opinion on the draft Annual Activity Report prepared by

the Director before its assessment by the EIT Governing Board.

(6) The EIT Audit Committee discussed the draft Annual Activity Report prepared by the Interim Director on

its meeting of 2 June 2017. The Audit Committee expressed its positive opinion on the draft Annual Activity

Report prepared by the Director and supports the adoption of the Governing Board s Assess ent of the Annual Activity Report 2016 as well as the adoption of the Annual Activity Report 2016.

HAS DECIDED AS FOLLOWS:

Article 1

Assessment of the Annual Activity Report 2016

The EIT Governing Board:

1. Welco es the results presented in the Annual Acti it ‘eport of the Authorising Officer the AA‘ . 2. Welcomes the fact that the EIT community has become stronger with the designation of EIT Food KIC. Regrets

that it could not designate a new KIC in the theme Added Value Manufacturing as no proposal was received

that met the overarching excellence criteria.

3. Welcomes that the Interim Director adopted the EIT s Grant Assurance Strateg .

4. Appreciates the fact that the EIT Regional Innovation Scheme was implemented through dedicated budget

lines in 2016.

5. Appreciates the further improvements in communication and stakeholder engagements and the successful

organisation of the 2016 EIT Innovation Forum (INNOVEIT).

6. Takes note of the declaration of assurance of the Interim Director and appreciates the presentation of all the

underlying building blocks that underpin that declaration. Expresses its satisfaction and appreciation of the

high le el of co it ent and the increasing ualit of ork of the EIT s staff and management.

7. Notes that the European Parliament granted discharge to the EIT in respect of the 2015 financial year, which

confir s the positi e trend in the EIT s anage ent and control s ste s.

8. Is strongly concerned that the number of posts made available to the EIT by the EU institutions has not

followed the significant growth of budget and activities.

9. Is deeply concerned that there is an inherently higher risk level of the EIT related to grant assurance in

comparison to the EIT staff resources.

10. Calls on the Commission to consider to further increase the staff allocated to the EIT and to initiate without

delay the amendment of the EIT founding regulation to enable the EIT to offer permanent contracts to its

staff.

11. Still notes ith concern that the EIT is not et full autono ous and that the ne EIT Director s selection has been cancelled. It calls on the Commission to finalise these processes as a matter of urgency.

12. Welcomes the positive and significantly improved results of the 2016 staff engagement survey.

Acknowledges that the staff turnover decreased from 17% in 2015 to 13% and that the total number of staff

increased by 9 to 59 during 2016 ensuring essentially full staffing of the EIT for the first time.

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13. Appreciates that new EIT-KIC Framework Partnership Agreements have been signed by February 2016 with

all KICs that has brought compliance with the Horizon 2020 legal framework while also maintaining the EIT-

specific features.

14. Notes that the European Court of Auditors Special ‘eport No. / on the EIT has been finalised.

Appreciates the conclusion of the Court that the main reasons for setting up the EIT are well founded and

generally supported by its stakeholders. It acknowledges that the Court brought useful recommendations to

further improve the EIT in terms of the demonstration of impact and reduction of complexity. It notes that

the EIT developed an Action Plan to implement the recommendations and that more than half of the actions

have already been implemented.

15. Notes that the detected error rate during the ex-post verification of 2015 grants was 1.18% and the residual

error rate is 0.98%, which is well below the materiality level of 2%.

16. Notes that the Internal Audit Service of the Commission acknowledged that the EIT has successfully adapted

its processes to the rules of Horizon 2020, and in particular the Rules for Participation, and that the EIT's

controls over the start-up process have been generally effective in supporting the new KICs in fulfilling the

requirements for "legal and operational readiness"; however, it notes with concern that according to the IAS

it is necessary to secure a robust application of the H2020 framework and to further improve the start-up

process of new KICs.

17. Notes that in the Internal Audit Capa ilit s assess ent the internal control s ste in place pro ides reasonable assurance regarding the achievement of the business objectives set up for IT; however, it notes

with concern that improvements are needed in the field of IT security, IT project management and

dependence on IT supplier.

18. Notes that the IAC confirmed the closure of twelve recommendations in December 2016, including the ones

regarding the selection process of new KICs. Calls on management to ensure implementation of further IAC

recommendations in 2017.

19. Looks forward to the results of the ongoing independent midterm evaluation of the EIT led by the European

Commission.

20. Appreciates the fact that throughout 2016, the EIT Interim Director kept the Governing Board fully informed

of the EIT s acti ities and progress a of Go erning Board eetings, facilitated a structured agenda. 21. Confir s that the EIT s Go erning Board s analysis and assessment of the AAR 2016 is positive and that the

AAR 2016 provides it with the necessary assurance for a positive assessment of the results achieved in 2016.

Article 2

Adoption of the Annual Activity Report

Based on the assessment of the Governing Board, as set out in Article 1 of this decision, the Annual Activity Report

2016 is adopted as set out in Annex 1 to this decision.

Article 3

Publication

The Annual Activity Report shall be sent by the Chairman on behalf of the Governing Board to the Court of Auditors,

to the Commission, to the European Parliament and the Council and shall be published on the website of the European

Institute of Innovation and Technology.

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Article 4

Enter into force

This decision shall enter into force on the day of its signature.

Done in Berlin on 27 June 20176

Signed

Peter Olesen

Chairman of the EIT Governing Board

Annex 1: Annual Activity Report 2016

6 Adopted by the EIT Governing Board via written procedure on 27 June 2017

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Consolidated Annual Activity Report

Financial year: 2016

The EIT – Making Innovation Happen

European Institute of Innovation and Technology (EIT)

Budapest | 15 June 2017

www.eit.europa.eu

The EIT is a body of the European Union

http://www.eit.europa.eu/

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Foreword from the EIT Interim Director

The Year in Brief

The EIT left behind another successful year in 2016 with hard work and challenges but even more importantly positive

results and improvements.

2016 has been a year in which the EIT Community has become stronger with EIT Food joining the existing five

Knowledge and Innovation Communities (KICs) with fostered relations with key stakeholders and with a stabilised EIT

Headquarters. We can already see today that the EIT is delivering tangible results based on the high ambition for which

the Institute was set up - to increase growth and competiveness in Europe. A prime indicator for the emerging success

of the EIT is For es that has hose 8 EIT Co u it e ers i their a ual For es u der list. We have

succeeded in creating a vibrant innovation community with over 800 partners from business, education and research

expanding all over Europe. In this sense, the EIT is creating concrete impact thanks to its innovative, flexible and

experimental nature.

In 2016, it became evident that high level messages from our stakeholders fully reflect the perspectives and ambition

of the EIT to further foster i o atio a d ork to ards rei for i g the EIT s edu atio a ti ities, i reasi g KICs transparency, increasing visibility as well as enhancing our regional outreach activities.

The EIT hosted several high-level stakeholders in 2016, in particular Commissioner Navracsics. His insights and those

of his High Level Advisory Group further enhanced the good collaboration and reinforced our common mission to

e ha e the EIT s functioning and to make innovation happen across Europe and beyond.

Talking of challenges in 6, the Europea Court of Auditors Special Report on the EIT quickly springs to mind. I am

pleased to report that we have already implemented more than half of the actions stemming from the

recommendations of the report, thereby simplifying operations and increasing the focus on results and impact. This

report served as an opportunity to make the necessary changes at the EIT, KICs and our processes to increase impact.

The financial sustainability of KICs is a unique ambition of the EIT-KIC model and it is one of the most challenging

aspe ts of the EIT s issio . While this was a distant objective for KICs in the past, they have now made this ambitious

and unique goal on of their main strategic objectives. The EIT has guided KICs towards on this road and we can see an

increasing level of revenues generated by KICs as a result. Furthermore, we have taken first steps towards creating the

EIT Growth & Impact Fund that will provide funding to invest into early stage and scale-up development of innovative

start-ups fro KICs pipeli e a d e o d.

Our continuous efforts towards making the EIT more visible are paying off. In 2016, we organised our annual innovation

conference (INNOVEIT), made first steps towards setting up the EIT House in Brussels and organised awareness days

in Members States and beyond. Numerous other events organised by the EIT Community, including the EIT Alumni

events, attracted high interest on the EIT, demonstrated also by the significant increase in the positive articles on the

EIT Community and followers on social media followers. If this trend continues we will see the EIT as the flagship

institute that is a key element of the EU innovation landscape.

Stability of the EIT as an organisation is at the centre of the commitment of the EIT Management. In 2016, we managed

to reduce significantly the staff turnover and the number of vacant posts. The positive results of the staff engagement

survey completed in December 2016 confirm that we have made EIT a challenging and rewarding place to work.

The success of the year 2016 could not have happened without the continued great efforts of the EIT stakeholders and

staff whose commitment and valuable contributions are essential in shaping the EIT into a fully-fledged and effective

innovation institute at the service of Europe.

Martin Kern

Interim Director of the European Institute of Innovation and Technology

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Contents INTRODUCTION ................................................................................................................................................. 9

Executive Summary ......................................................................................................................................... 11

PART I .............................................................................................................................................................. 15

ACHIEVEMENTS OF THE YEAR ......................................................................................................................... 15

1.1 Incentivising Growth, Impact and Sustainability through the EIT ........................................................... 15

1.1.1 Consolidating, Fostering Growth and Impact of the KICs ............................................................................................................... 15

1.1.2 Creating new KICs ....................................................................................................................................................................... 24

. . Enhancing the EIT s i pact ..................................................................................................................... 26

. . . The EIT s ne t Strategic Inno ation Agenda SIA -2027 ....................................................................................................... 26

1.2.3. Fostering and Attracting Talent ..................................................................................................................................................... 30

1.2.4 Enhancing Stakeholder Engagement .............................................................................................................................................. 31

1.3. New Delivery Mechanisms and Results-oriented Monitoring ................................................................ 34

1.3.1 EIT-KIC Relations ....................................................................................................................................................................... 34

1.3.2. Simplification ....................................................................................................................................................................... 36

1.3.3. Monitoring, Impact Analysis and Evaluation ................................................................................................................................. 37

1.4. Horizontal activities ................................................................................................................................. 40

1.4.1 Strategy: Co-ordination and implementation ................................................................................................................................. 40

1.4.2 Internal Communication and work environment ........................................................................................................................... 43

1.4.3 Administrative support ................................................................................................................................................................... 44

1.4.4 Internal Audit Capability ................................................................................................................................................................. 50

PART II ............................................................................................................................................................. 51

MANAGEMENT ............................................................................................................................................... 51

2.1. EIT Governing Board ............................................................................................................................... 51

2.2. Major Developments............................................................................................................................... 52

2.3. Budgetary and Financial Management ................................................................................................... 52

2.4. Human Resources (HR) Management..................................................................................................... 55

2.5 Assessment by Management ................................................................................................................... 57

2.6 Assessment of audit results during 2016 ................................................................................................. 60

2.6.1 Internal Audit Service (IAS) ............................................................................................................................................................. 60

2.6.2 Internal Audit Capability (IAC) ......................................................................................................................................................... 61

2.6.3 European Court of Auditors (ECA) .................................................................................................................................................. 62

2.7 Follow up of IAC recommendations and action plans for IAC audits ...................................................... 64

2.8 Follow up of observations from the Discharge authority ........................................................................ 64

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PART III ............................................................................................................................................................ 67

ASSESSMENT OF THE EFFECTIVENESS OF THE INTERNAL CONTROL SYSTEMS ............................................... 67

3.1. Risk management .................................................................................................................................... 67

3.2. Compliance and effectiveness of Internal Control Standards (ICS) ........................................................ 68

PART IV............................................................................................................................................................ 71

MANAGEMENT ASSURANCE ........................................................................................................................... 71

4.1 Review of the elements supporting assurance ........................................................................................ 71

4.2 Overall conclusion on assurance .............................................................................................................. 71

DECLARATION OF ASSURANCE ....................................................................................................................... 72

ANNEXES ......................................................................................................................................................... 73

Annex I: Validated EIT core KPIs (Grant Agreements 2015) ............................................................................ 74

Annex II: Statistics on financial management ................................................................................................. 75

Annex III: Organisational chart in 2016 ........................................................................................................... 80

Annex IV: Establishment Plan and additional information on Human Resources management ..................... 81

Annex V: Human and Financial resources by activity ...................................................................................... 84

Annex VI: Specific annexes related to part II................................................................................................... 85

Annex VII: Specific annexes related to part III ................................................................................................. 99

Annex VIII: Final annual accounts 2016 ........................................................................................................ 106

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INTRODUCTION

This consolidated annual activity report provides an overview of the activities and achievements of the European

Institute of Innovation and Technology (EIT) in 2016 and has been established based on the guidelines of the EU

Agencies Performance Development Network.

The EIT s Annual Acti it ‘eport 6 is a report of the EIT Interim Director. It is a key component of the strategic

planning and programming cycle: it is the basis on which the EIT Interim Director takes its responsibility for the

management of resources and the achievement of objectives. It also allows the EIT Interim Director to decide on the

necessary measures to address any potential management and control weaknesses identified. It is in compliance with

Article 47 of the EIT Financial Regulation, as adopted by the EIT Governing Board on 27 December 2013.

The Annual Activity Report 2016 comprises four main parts and annexes as follows.

Part I: Achievements of the financial year 2016. Mirroring the structure of the Annual Work Programme of the EIT for

the year of 2016, Part I provides information on achievements of objectives set in the annual work programme. This

section also includes references to progress against Key Performance Indicators (KPIs) and targets.

Part II: Management. This section provides information on the functioning of the EIT Governing Board. It also includes

major internal and external developments which had an impact on the EIT during the reporting year as well as

information on budgetary and financial management, Human Resources management, assessment by the EIT

management and also assessment of audit results during 2016, along with the follow-up of recommendations and

action plans resulting from audits. It also includes components on the follow-up of observations from the Discharge

authority.

Part III: Assessment of the effectiveness of the internal control systems. The report details in Part III the most important

areas of risks associated with the EIT s operation as well as compliance with and effectiveness of the Internal Control

Standards (ICS).

Part IV: Management assurance. The report concludes in Part IV with a declaration of assurance in which the EIT

Interim Director, in his role as Authorising Officer, takes responsibility for the legality and regularity of all financial

transactions.

In the annexes, the report provides statistics and information on the EIT core KPIs, financial management,

organisational chart, establishment plan, Human and Financial resources used by activity, the EIT s final annual

accounts and further specific annexes related to Part II and Part III of the report.

The EIT Annual Activity Report is a public document and is available on the EIT website.

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The EIT in brief

The EIT s ission is to contri ute to sustaina le European econo ic gro th and co petiti eness reinforcing the innovation capacity of the Member States and the European Union. It does this by promoting and integrating higher

education, research and innovation of the highest standards.

The EIT achie es its ission full integrating all three sides of the kno ledge triangle , i.e. higher education, research and business, in Knowledge and Innovation Communities (KICs). By bringing together leading organisations

from these dimensions to cooperate in the KICs, the EIT is able to promote innovation in Europe. Underlying all of the

EIT s acti ities is the aim of encouraging and facilitating approaches favourable to entrepreneurship-driven innovation

being able to turn major societal challenges into future economic opportunities to create economic growth and skilled

jobs. The EIT contributes to Europe 2020, the Inno ation Union , Horizon and the European Co ission s objectives by integrating the knowledge triangle . This integration takes place primarily in the Knowledge and

Innovation Communities (KICs) that bring together excellent organisations to tackle societal challenges on a long-term

basis. Based on existing European excellence, the KICs continue to build upon and create new ecosystems tackling the

fragmentation and duplication of efforts across borders to generate critical mass, enhance and strengthen

collaboration, optimise the use of human, financial and physical resources, and attract talented individuals from all

over the world.

To date, the EIT has established a total of six KICs:

EIT Climate-KIC, EIT Digital and EIT InnoEnergy were designated in 2010 and are fully operational and deliver

outputs and results as easured the EIT s core KPIs.

EIT Health and EIT Raw Materials were designated in December 2014 and completed their first full year of

operations in 2016.

EIT Food was selected and designated by the EIT Governing Board in November 2016 and will complete their

start-up year in 2017.

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Executive Summary

Highlights of the year

The innovative nature of the EIT and its emerging results indicate a strong potential for the EIT to make a major

contribution though its pan-European innovation systems to address major societal challenges. In 2016, the EIT saw

its first three Innovation Communities (EIT InnoEnergy, EIT Climate-KIC and EIT Digital) reach full maturity and deliver

an increasing number of innovative products, services and skilled

entrepreneurial talents from its education programmes. We have

also seen our second wave of Innovation Communities (EIT Health

and EIT Raw Materials) establish their innovation ecosystems in their

first year of activities. Moreover, a new Innovation Community (EIT

Food) was selected. Over 800 partners from business, research and

education now form the EIT Community and together, we are

Europe s largest innovation network that makes a significant

contri ution to Europe s co petiti eness, gro th and jo creation, bringing EU level value added to the European innovation landscape.

Concrete highlights of activities performed in 2016 were:

The 2016 Call for KIC proposals in the themes Food4Future and Added-value Manufacturing resulted in the

designation of a new Innovation Community, EIT Food, in November 2016, increasing the number of established

Innovation Communities to six. No Innovation Community was designated in the Added-value Manufacturing theme

but the EIT Governing Board decided, after detailed and careful analysis, to re-launch the call for proposals in this

thematic area in 2018 as no proposal was received that

met the overarching excellence criteria.

The EIT organised a successful edition of INNOVEIT, its

annual Innovation Forum, attended by Commissioners

Navracsics and Moedas, with successful EIT award

winners, inspiring sessions, a tour of EIT Community

innovations and a strong media interest. More than 350

participants from across Europe and beyond, business

leaders, research and higher education experts, policy

and decision-makers, media and EIT Alumni came

together to discuss opportunities for collaboration

during the EIT Stakeholder Forum and celebrated the

achievements of EIT Community innovators and

entrepreneurs during the EIT Awards. The Member

State Configuration meeting provided the opportunity

for a structured dialogue between the EIT management and the five Innovation Communities management and the

bit.ly/EITAwards2016.

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representatives of 18 countries. An analysis of the results of the feedback questionnaire was carried out and 94% of

responding participants indicated that INNOVEIT 2016 was an informative and inspiring conference.

In 2016, the EIT Regional Innovation Scheme (EIT RIS) was implemented as an important element of the EIT

Co unit s outreach strategy, operationalised through dedicated budget lines of the Innovation Communities and

financed from grants earmarked by the EIT for this purpose. The EIT RIS succeeded in involving stakeholders from 16

additional European countries that were not previously engaged in EIT activities.

The substantial increase in the values of the EIT core Key Performance Indicators

(presented in Annex I of this report) confirms that the EIT Community is delivering

tangible results towards achieving its ambitious objectives. Furthermore, the EIT in a

cooperation with its Innovation Communities has developed a new set of 11 new

results-oriented core KPIs to better address the EIT intervention and the KICs

activities. The Education Review has confirmed that the most added value occurs

when programmes link the Education Pillar with the Innovation Pillar and the Business

Creation Pillar, creating new forms of learning experiences for students.

Finally, the EIT continued to exploit synergies and complementarities with priority

stakeholders, including EU and other funding institutions in 2016. As a result, the EIT

signed a Memorandum of Understanding, including an action plan, with the European

Co ission s Joint Research Centre (JRC) and an open call on under the Copernicus

Programme was launched with KICs as eligible beneficiaries.

The European Court of Auditors released its Special Report on the EIT covering the

2010-2014 period. The audit confirmed the relevance of the EIT model to foster

innovation and brought useful recommendations that can help the EIT to further

increase efficiency, effectiveness and impact. The EIT developed an action plan to

implement the recommendations together with the Commission and KICs. As of

today, we have already implemented more than half of the actions stemming from

the recommendations of the report, thereby simplifying operations and increasing

the focus on results and impact.

The EIT and its EIT Governing Board had the pleasure of welcoming Commissioner Navracsics and his High-level

Advisory Group at the occasion of the presentation of their final report.

Based on initial reflections by the EIT on how to further enhance innovation capacities in Europe based on the

experience and insights gained by EIT and its Innovation Communities, the EIT took active part in strategic discussions

with stakeholders in 2016 with a focus on its future strategy.

Since the EIT Governing Board s main priority for 2017 is the development of the EIT s Strategic Inno ation Agenda (SIA) for the post-2020 period, preparatory work started already in the second half of 2016. The SIA 2021-2027 will

cover the EIT s se en-year strategy, defining the priority fields and strategic objectives for the EIT. It will include an

assess ent of the EIT s socio-economic impact and capacity to generate the best innovation added-value; an analysis

of potential and appropriate synergies and an estimate of financial needs and sources and an indicative financial plan.

In the context of the strategy development, the EIT s future ision, ission and inter ention logic taking into account the added value and impact the EIT can offer will be assessed and further defined. Having established a strong pan-

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European innovation system with 30 innovation hubs and over 800 partners, the EIT is in a strong position to raise its

ambition and build on the platform and network it has created and which is now delivering tangible results.

The EIT launched a new initiative, the EIT Growth and

Impact Fund, which has the potential to complement

the EIT activities and increase their scale and impact. A

first feasibility study was conducted. In this context, the

Commission undertook to investigate the possibility of

scaling up the activities of the EIT to promote

entrepreneurship, management and innovation skills in

its Communication of 22 November 2016 on the Start-

up and Scale-up Initiative.

The 2016 Grant Agreements with Innovation

Communities based on their Business Plan were

concluded with a total allocation of EUR 275 million and

pre-financing payments were made in amount of EUR

170 million, the highest ever for the EIT. The grant

agreements were signed under the new Framework

Partnership Agreements which were concluded with

the five Innovation Communities in February 2016

ensuring full compliance with the Horizon 2020 legal framework while also maintaining EIT-specific features.

In 2016, the EIT reengineered its programming and grant allocation process, which resulted in the finalisation of the

grants in December 2016 and subsequently their timely signature in early 2017 of specific grant agreements with the

five established Innovation Communities committing a total of EUR 320 million for the implementation of their

innovation boosting activities.

Crucial work started in 2016 concerning the future of the EIT

including the independent external evaluation of the EIT led

by the European Commission. Its purpose is to assess the EIT's

work as identified in the EIT Regulation and Horizon 2020

Regulation, and in particular to examine how the EIT fulfils its

mission.

In 2016, the composition of the EIT Governing Board

significantly changed due to expiring terms of office that

resulted in the appointment of five new EIT Governing Board

members from the fields of business and academia. With the

appointment of the five EIT Governing Board Members the EIT

Governing Board has again reached its full size, 12 appointed

Governing Board Member in November 2016.

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In order to further improve the awareness, visibility and reputation of the EIT Community towards strategic

stakeholders in Brussels, the EIT started to establish an EIT House in Brussels. The official inauguration of the EIT

House is expected to take place in September 2017.

The EIT further fostered the direct engagement with its institutional stakeholders, including the European Parliament,

European Commission services and EU Member States as well as other key stakeholders from across the Knowledge

Triangle in a structured, targeted and tailored manner. The cooperation with the EIT Governing Board and the

Innovation Communities was further strengthened via structured dialogues, such as the regular EIT Governing Board,

EIT-KIC Forum and EIT-KIC Chairmen meetings.

Key conclusions on the effectiveness of the internal control system and resources management

The EIT adopted a set of internal control standards, based on international good practice, that aim to ensure the

achievement of strategic and operational objectives.

In accordance with the EIT s governance statement, EIT staff conducted its operations in compliance with the

applicable laws and regulations, working in an open and transparent manner and meeting the expected high level of

professional and ethical standards.

The EIT also put in place an organisational structure that is suited to the achievement of its objectives in accordance

with the standards and having due regard to the risks associated with the environment in which it operates.

In 2016, the EIT focused on compliance with the standards that were identified as areas of concern during the risk

assessment exercise, as well as on the recommendations raised by the auditing bodies. During 2016, the EIT achieved

compliance with the internal control standards.

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PART I

ACHIEVEMENTS OF THE YEAR

1.1 Incentivising Growth, Impact and Sustainability through the EIT

1.1.1 Consolidating, Fostering Growth and Impact of the KICs

1.1.1.1 Promoting Collaboration and Competition among KICs

Business plan assessment and grant allocation for 2017

By Decision 26/2016, the EIT Governing Board defined the principles for the determination of the 2017 EIT financial

allocation, determined the split of the EIT budget available between the first and the second waves of KICs and laid

down the principles for the allocation of the funding including the split between support and competitive funding and

the modalities for determining the competitive funding, thereby fine-tuning the EIT s perfor ance-based budget

allocation process. In April 2016, the EIT invited the KICs to submit their business plans for 2017 and issued updated

guidelines for their preparation. The 2017 financial allocation process was simplified in line with the recommendations

of Special Report 4/2016 of the European Court of Auditors, giving equal weight to past performance and future plans

within the competitive funding allocation. The first pillar remained focused on the past performance, while the second

pillar focused on the future plans and the progress of i ple entation of the KICs ulti-annual strategy. This has

simplified and improved the process of competitive review across KICs. All five existing KICs submitted their Business

Plans in September 2016 which went through scrutiny of EIT with assistance of external experts.

With respect to the assess ent of the KICs progress in the i ple entation of their ulti-annual strategy, a new

feature has been introduced. In support of the EIT Governing Board and in order to increase the involvement of the

EIT Governing Board in the assessment of KICs, the EIT Governing Board designated one GB Member as Rapporteur

for each wave of KICs to oversee the assessment process and report back to the Board in the Hearing with KICs in

December 2016. The GB Rapporteurs followed up on how KICs had implemented the strategic recommendations

issued the EIT Go erning Board in pre ious ears through personal eetings ith the KICs anage ent tea s and assess ent of the results of the EIT s continuous onitoring acti ities. The GB Rapporteurs also met with the

expert panels to better understand the strengths and weaknesses of the KICs usiness plans proposed for 2017. The

role of the GB Rapporteur was positively perceived by all involved actors and will continue in the future. The Hearings

with the KICs were held on 7 December 2016. The Hearing format was also improved with longer interactive Q&A

session, allowing a more in-depth discussion and thus providing the EIT GB with information for their decision-making.

As a result of the competitive funding allocation process, the following amounts were allocated to the first wave KICs

for 2017: EUR 79,596,991 to Climate-KIC, EUR 84,059,750 to EIT Digital and EUR 84,343,259 to EIT InnoEnergy. For

the second wave KICs the final 2017 financial allocation was: EUR 33,224,756 to EIT Health and EUR 34,775,244 to EIT

RawMaterials. In addition, EUR 4,000,000 was earmarked for the implementation of the cross-KIC activities. Therefore,

the total EIT financial contribution to the implementation of the KICs Business Plans for 17 amounts to EUR

16

320,000,000. As every year, the EIT Governing Board also issued strategic recommendations to each of the five KICs

in order to further improve in key areas.

The reengineered and efficiently managed programming and grant allocation process resulted in timely signature of

the 2017 specific grant agreements with KICs. The EIT signed the 2017 grant agreements by mid-February 2017 with

four of the five KICs and transferred the pre-financing payments corresponding to 70% of the EIT grant awarded by

end-February 2017. The 2017 grant agreement with the fifth KIC was signed in the beginning of April 2017. The EIT

has managed to reduce the time-to-grant significantly to 5 months on average.

Report assessment and verification of Grant Agreements 2015

Ex-ante assessment and payments

As regards first-wave KICs, the EIT carried out the ex-ante verification of KIC Reports on the execution of the 2015

Business Plans between April and August 2016. The assessment encompassed different operational and financial

elements such as completeness and consistency check, performance assessment including KPIs, as well as verification

of cost eligibility. External experts supported the EIT in particular concerning performance assessment. The financial

assessment was partially based on Certificates Financial Statements obtained from independent auditors. The

modalities and processes of the EIT ex-ante verification were strengthened and more thoroughly documented

compared to previous years. A newly introduced element was the resolution meeting organised between the EIT and

each of the KICs replacing numerous rounds of questions and answers, which increased the efficiency of the process.

The validated core KPIs for 2015 per KIC are as follows:

Core KPI EIT Climate-KIC EIT Digital EIT InnoEnergy

Attractiveness of the EIT Labelled

education programmes

Ratio: 3.89

549 applications for

141 seats

Ratio: 4.08


400 seats

Ratio: 6.09


259 seats

Number of graduates (EIT Labelled

degrees)

117 146 132

Business ideas incubated 245 173 91

Start-ups/Spin-offs created 35 start-ups + 1 spin-

offs

3 start-ups + 4 spin-

offs

23 start-ups + 0 spin-

offs

Knowledge Transfer / Adoption 57 transfer + 25

adoption

56 transfer + 136

adoption

5 transfer + 35

adoption

New or Improved

Products/Services/Processes

38 new + 14 improved 18 new + 6 improved 14 new + 2 improved

17

The final grant absorption (in MEUR), absorption rate (%), error rate (%) and reimbursement rate (%) per KIC for the

2015 Grant Agreements is as follows:

KIC EIT Climate-KIC EIT Digital EIT InnoEnergy Total

Grant allocated by

the EIT GB in

December 2014

91.18 83.82 84.96 259.96

Grant payment

requested on 31

March 2016

87.18 66.79 67.99 221.96

Grant approved

and paid by EIT

85.08 66.76 67.29 219.13

Difference

between awarded

and paid

6.1 17.06 17.67 40.84

Absorption rate 93.3% 79.6% 79.2% 84.3%

Ex-ante error rate

in grant

2.4% 0.1% 0.5% 1.3%

Reimbursement

rate of eligible

costs

97.4% 84.9% 87.7%

The assessment of the GA 2015 Final Report proved that EIT Climate-KIC has strong advantages and delivered good

results in 2015, such as a matured business creation ecosystem with 170 start-ups raising a total of 189 MEUR in

external investments over the four-year period (2012-2015). However, it was concluded that the refreshed

operational structure needed to become more active, effective, shared and functional across the KIC. Moreover, the

KIC had yet to develop an effective business model that can lead to financial sustainability. As regards EIT InnoEnergy,

a refreshed education strategy and a risk management exercise was implemented which could help address previously

identified weaknesses like underperformance in education and could reap benefits in future years. The first projects

e erging fro the KIC s research acti ities were becoming mature and starting to deliver results to the market. The

business creation area was considered a success within EIT InnoEnergy with new ventures being incubated and

started. EIT Digital had made significant progress in 2015 and its results provide the EIT with considerable credibility

across the EU. The relatively low number of start-ups created was a result of EIT Digital s strateg to focus on companies in the scaling-up phase. However, only limited progress has been made towards securing financial

sustainability in 2015. The financial management and financial reporting of EIT Digital is considered reliable; however,

the budget absorption shall be better monitored in the course of implementation of future Business Plans.

Similarly, for second-wave KICs the EIT carried out an ex-ante verification of the reports on the implementation of the

Start-Up Plans in line with the Start-Up Grant Agreements. Both EIT Health and EIT RawMaterials achieved all the

objectives and deliverables specified in their respective Start-Up Plan in terms of legal readiness, operational readiness

and fostering the EIT identity. As a consequence, the EIT approved the reports and settled the final balance payment

for the Start-Up phase.

18

The final grant absorption (in MEUR), absorption rate (%), error rate (%) and reimbursement rate (%) per KIC for the

2015 Start-up Grant Agreements is as follows:

KIC EIT Health EIT Raw Materials Total

Grant allocated by

the EIT GB in

November 2014

3.30 3.82 7.12

Grant payment

requested on 31

March 2016

3.30 3.82 7.12

Grant approved

and paid by EIT

3.30 3.81 7.11

Difference

between awarded

and paid

0 0.1 0

Absorption rate 100.0% 99.8% 99.9%

Ex-ante error rate

in grant

0.0% 0.2% 0.1%

Reimbursement

rate of eligible

costs

91.0% 95.9%

Result of ex-post audits

Ex-post audits of cost reports related to Grant Agreements 2015 were performed by an external service provider on

the basis of the Framework Contract of the European Commission. In accordance with the audit methodology devised

by the EIT, the 28 KIC Partners audited (11 for EIT Climate KIC, 11 for EIT InnoEnergy and 6 for EIT Digital) were selected

by the EIT primarily on the basis of a risk assessment in order to maximise the efficiency of the resources spent on ex-

post audits. The risk-based audit sample was complemented by a random sample in order to ensure a more

representative coverage of KIC Partners over the duration of the Framework Partnership Agreements. The external

audit service provider carried out the on-spot audits based on the audit programme provided by the EIT and reported

the results to the EIT. The process was completed in May 2017. The audited grant covered 17% of the total grant paid

for the Grant Agreements 2015. As a result of the ex-post audits, the detected error rate equals to 1.18%. The residual

error rate after ex-ante and ex-post controls is 0.98%.

Contracting and amendment of legal framework (new EIT-KIC Framework Partnership Agreements)

All five Framework Partnership Agreements have been signed by February 2016 that has brought full compliance with

the H2020 legal framework while also maintaining the EIT-specific features. The Framework Partnership Agreements

have been accompanied by detailed Explanatory Notes to ensure that KICs and all KIC Partners are familiar with certain

technical aspects of the legal agreements such as the rules applicable to the use of Intellectual Property Rights and

the liability of individual KIC Partners in case of partial non-implementation of the Business Plans.

Improving the grant assurance framework

19

In October 2016, the EIT adopted its revised Grant Assurance strategy. The overall objective of the EIT grant assurance

activities is to obtain reasonable assurance that the implementation of EIT grants to the KICs comply with EIT

objectives and that KIC activities funded are legal and regular. The strategy relies on the following building blocks of

assurance:

The revision of the Grant Assurance strategy took on board the recommendations made by external experts,

improvement measures designed by the Simplification Task Force as well as lessons learnt by the EIT during the

implementation of previous grant cycles

Furthermore, in collaboration with KICs, the EIT completely revised its guidelines on the entry and exit of KIC partners

to make the rules and procedures clearer and more transparent. In addition, enhancements were made to the

Business Planning and KIC Reporting guidelines in order to incorporate lessons learnt from the past. The EIT also issued

a transition plan and guidance on EIT funded part of KIC management costs to ensure consistency across KICs in terms

of defining KIC management activities and introducing thresholds for EIT funding of KIC management costs. In line

with this guidance, as from 2016, the EIT applies a double ceiling system: 1) an overall cap, in terms of percentage of

total EIT funding, for the management and overhead costs; 2) individual caps per job category to determine the

maximum EIT funding for staff costs. The overall cap was set at 18% in 2016 and will be gradually reduced to 12% by

2018. The individual salary caps are based on the salary scales for officials of the European Union as set out in the EU

Staff Regulations. The EIT has also circulated to the KICs a guidance note on the implementation of EIT Regional

Innovation Scheme (EIT RIS) activities.

20

Performance indicator Target Results/achievements

Effectiveness and timeliness

of competitive funding

allocation process to five

KICs under grant allocation

process 2017

Full allocation of

available funds to five

KICs by Q4 and

implementation of the

simplified rules to

improve the Business

Plan 2017 issued

Invitation to submit KIC Business Plan

2017 including estimated budget issued

in April 2016

2017 Business plans and budget

submitted by all five KICs in September

2016

Business Plan assessment reports

completed by the EIT in Q4 2016

EIT Governing Board decision on

competitive funding under the annual

grant allocation on 8 December 2016

Timely signature of Grant

Agreements 2016

Signature of Grant

Agreements 2016 by

end February 2016

Five Grant Agreements 2016 signed by

April 2016 and pre-financing payments

made

Reduction of the error rate

of the KIC financial

transactions

Improvement in the

absorption capacity of KICs

Ti el re ie of the KICs reports on the

implementation of the good

governance principles

100% of

recommendations and

actions incorporated in

the revised grant

assurance strategy by

Q4 2016

10% reduction of the

total final error rate for

Grant Agreement 2015

compared to Grant

Agreement 2014

95% of the grants

awarded to KICs are

actually spent (GA 2016)

Revised EIT grant assurance strategy

adopted on 12 October 2016,

incorporating previous lessons learnt and

recommendations

Based on results of ex-ante verification of

2015 grants, error rate in grants is 1.3%

for first-wave (2015: 2.11%) and 0.1% for

the start-up phase of second-wave KICs

Based on results of ex-ante verification of

2015 grants, 84.3% for first-wave and

99.9% for the start-up phase of second-

wave KICs

21

Timely issuance of guidance

documents and replies to

KIC queries

Improvement measures

made

Timely availability of

improved IT tools including

review of functions of

H2020 IT tools

Review completed and

best practices shared

with the KICs by Q2

2016

Additional guidance

issued for KICs on

programming,

implementation,

reporting and fostering

EIT identity, including

EIT label by the

deadlines fixed in the

grant cycle calendar

At least two

improvements of

processes agreed at

each EIT-KIC Forum on

average

Improved IT platform

available by Q4 2016

Implementation of good governance

principles reviewed in Q2 together with

2015 KIC reports, results communicated

to KICs in Q3 2016

Revised guidelines and transition plan on

EIT funded part of KIC management costs

issued throughout 2016. Improved

timeline for the 2017 grant allocation

process.

Main business processes have been

reengineered leading to shorted time-to-

grant and time-to-pay

Improved IT platform for BP and Report

submission

Timely processing and

finalisation of ex-ante

verifications of Grant

Agreements 2015

performance and cost

reports

Improved efficiency of the

ex-ante verification of KIC

reports first ti e right reporting implemented)

Grant Agreements /

Start-Up Grant

Agreements 2015

verified by end July

2016 and payments

made by September

2016

20% reduced number of

appeals by KICs on EIT

verification findings

compared to 2015

EIT assessment reports for two GA 2015

KIC Reports and two SUGA Reports

approved in July, Climate KIC approved in

September 2016

Final balance payment made to four KICs

in August/September, and to Climate KIC

in October

Formal letters sent to KICs in Q3 2016

closing the GA 2015 ex-ante verification,

only one KIC submitted a formal

disagreement with the conclusions (2015:

three KICs submitted letters of formal

disagreement)

Two audit companies contracted in Q4

2016 to carry out 128 CFS audits in Q1

22

Centralisation and timely

contracting of the CFS

audits

Timely processing and

finalisation of ex-post audits

Auditors selected and

contract(s) with CFS

auditors signed by Q4

2016

Audits completed by

end April 2016 (reports

for Grant Agreements)

2014)

Auditors selected by

end October 2016

(selection for Grant

Agreements 2015)

2017 in relation to costs declared under

the 2016 SGA

Ex-post audit completed (28 final ex-post

audit reports) in May 2016 on Grant

Agreements 2014

Contract signed in October 2016 for ex-

post audit on Grant Agreements 2015, 28

KIC Partners selected for audit

1.1.1.2. Knowledge Triangle Integration

Improving the EIT Label Framework

In line with the EIT Annual Work Programme 2016, the EIT conducted the assessment of new educational programmes

according the amended EIT Label Handbook. The EIT received 15 new proposals submitted by KICs and their academic

partners. The assessment of submitted applications by the panel of independent experts was concluded on 31 August

2016 and all seven programmes recommended for the Label (five for EIT RawMaterials and two for EIT Health) have

been awarded the EIT Label by the decision of the EIT Interim Director for an initial period of three years.

The results of the EIT Label assessments have been communicated officially to the KIC Education Directors, as

members of the EIT Label Committee as foreseen by the EIT Label Framework, and the list of EIT Labelled programmes

was updated on the EIT website.

In conclusion, the EIT Label, as a quality seal, has been further strengthened through the independent assessment

carried out by the panel of experts.

Encouraging women entrepreneurship

The long-term objective of the EIT s o en entrepreneurship activities is to empower women entrepreneurs and

nurture women leaders by increasing the number of girls aged 12 to 18 interested in technology, innovation,

digitalisation, entrepreneurship and leadership. In 2016, the EIT organised a series of pilot female entrepreneurship

& leadership activities with the ambition to increase the number of women innovators and entrepreneurs as follows.

Three “Wo en Leaders and Entrepreneurs of To orro orkshops for 12-18 years old female students were held

in partnership with Ernst & Young in October and November 2016 at several co-working spaces in Budapest. A total

of 16 local Hungarian female entrepreneurs provided their insights over the three workshops. The participants were

introduced to entrepreneurship, technology, leadership and business management and creation. In total, the three

workshops attracted close to 100 participants.

https://eitrawmaterials.eu/eit-rm-academy/

https://eithealth.eu/programmes/campus-2/

23

The EIT supported the expansion of an online coding competition open to women coders aged 12-18 years in the CEE

region.


Harmonised approach

implemented to EIT

Labelled masters, doctoral

programmes and modules

All EIT labelled masters

and doctoral

programmes aligned

with revised EIT Label

handbook by Q3 2016

Seven new EIT Labelled masters and

doctoral programmes approved in

October 2016

Timely development and

implementation of a pilot

activity encouraging

women entrepreneurship in

a sustainable manner

Pilot activity

implemented reaching

minimum 100 young

women by Q4 2016

More than 100 participants reached in

the various female entrepreneurship

activities

1.1.1.3. Fostering Growth and Creating Impact

Synergies with EU funds and programmes

In 2016, the EIT continued to exploit synergies and complementarities with priority stakeholders, including EU and

other funding institutions. By carrying out a thorough mapping of existing as well as potential synergies of the EIT with

EU programmes and initiatives, priority stakeholders have been identified and a structured dialogue has been

established with most of them. A concrete example is the collaboration with the Joint Research Centre (JRC), which

has been further specified. In this context, a Memorandum of Understanding was signed in September 2016, including

a concrete action plan. The identified areas of cooperation are as follows:

Smart Specialisation-Regional Outreach, targeting to complementarities of the EIT Regional Innovation

Sche e ith the J‘C s S art Specialisation Platfor S P ; Education, Training and Skills;

Technology Transfer, Intellectual Property and New Financing Mechanisms;

Communications and Knowledge Management.

In addition, synergies with DG GROW have been explored in different areas. As a result, a reference to the scaling up

of EIT education activities for the New Skills Agenda has been included in the Commission Communication for the

Start-Up and Scale-Up Initiative. Furthermore, following the collaboration with DG GROW on the Copernicus

Programme, an open call on “Building skills and earth o ser ation related e pertise through Copernicus was

launched with KICs as eligible beneficiaries. The call, with a total budget of EUR 613,000, aimed at the provision of

educational activities (summer schools, master classes, PhD grants and post-doc grants) in the areas of sustainable

exploration, extraction, processing, recycling and substitution. Moreover, the EIT established a structured dialogue

with DG GROW F.1 Innovation Policy and Investment for Growth, in the framework of the Smart Specialisation

Platform on Industrial Modernisation.

24

Collaboration opportunities with the Enterprise Europe Network (EEN) have been initially explored as well as with DG

REGIO with a view to smart specialisation and the links with the EIT Regional Innovation Scheme, including the

potential of KICs access to the structural funds. Moreover, potential synergies have been explored with the DG RTD

Seal of Excellence initiative and as a result a pilot activity with Climate-KIC was launched in Q4 2016.

Create investment project pipeline through collaboration with EFSI and IFIs

Due to re-prioritisation of activities and shortage of available human resources, the EIT focused its efforts in relation

to IFIs (International Financial Institutions) and EFSI to their potential role in providing initial funds to the EIT Growth

& Impact Fund (cf. chapter 1.3.1.1.), which could create a unique partnership of public and private parties and fill a

significant gap in the current funding environment. In 2016, the EIT held numerous discussions with the European

Commission (DG RTD), the EIF, EIB and other stakeholders with the objective of securing support for the EIT Growth

& Impact Fund.


Synergies of EIT with other

EU programmes (e.g. other

H2020 programmes, ESIF,

IPA), funding bodies (e.g.

EIB, EIF) and policies (e.g.

Digital Agenda, SET Plan

etc.) and structured

dialogue in place, including

joint initiatives

Analysis completed on

links of EIT with other

EU programmes and

services based on

structured dialogue and

at least one joint pilot

project under way by

Q4 2016

Memorandum of understanding signed

with JRC and collaboration with other

programmes in place

Facilitate a successful

project application by KICs

to EFSI or IFIs

Minimum one project

application to the EFSI

or IFIs by KICs by Q4

2016

Preparatory analysis for the EIT Growth

& Impact Fund carried out (cf. chapter

1.3.1.1.)

1.1.2 Creating new KICs

1.1.2.1. Designating two new KICs in 2016 on Added-value Manufacturing and

Food4Future

The 2016 Call for KIC Proposals in the the es Food Future - Sustaina le Suppl Chain fro ‘esources to Consu ers and Added- alue Manufacturing was launched as planned on 14 January 2016. Information about the Call was

published on the EIT website, in the Official Journal of the European Union and on the H2020 Participant Portal. The

Call has also been widely publicised through the EIT s social edia channels.

25

On 18 February 2016, the EIT organised an Information Day for the 2016 Call for KIC Proposals with over 400 registered

participants. The main objectives of the conference was to provide participants with information on the Call and

guidance to potential applicants in submitting high quality and successful proposals.

The 2016 Call for KIC Proposals was closed as planned on 14 July 2016. The process of selecting and contracting

independent external experts was finalised in July 2016 and the experts evaluation stage was finalised as planned in

October 2016. On 17 November 2016, the EIT Governing Board held hearings with the applicants. Following the

hearings with the EIT Governing Board, the FoodConnects consortiu as designated to eco e EIT Food and the

second-placed proposal was put on the reserve list. The EIT Governing Board did not select and designate a KIC in the

area of Added-value Manufacturing. After a thorough evaluation procedure and Hearings with the EIT Governing

Board, it was decided unanimously that the single proposal received could not be designated as an EIT KIC, as in the

opinion of the Board it did not meet the excellence threshold.

As stated by the Independent Observer in its assessment, the evaluation process of the 2016 Call for KICs Proposals

succeeded well in delivering an objective, impartial and justified proposition for the final decision. The EIT submitted

to EIT Food the designation package including the start-up guidance describing key milestones to be achieved by the

consortium in the start-up phase and the template of the Start-up Grant Agreement (SUGA) with annexes still in 2016.

After negotiations on the start-up plan in January and February 2017, the EIT and EIT Food signed the Start-up Grant

Agreement on 29 March 2017.

Following the outcome of the evaluation process, the EIT Governing Board tasked the EIT to carry out a thorough

analysis in order to be able to take an informed decision on whether to re-launch the call in the Added-value

Manufacturing theme at a later stage under the current EIT Strategic Innovation Agenda. The EIT carried out the

analysis, involving independent experts with expertise in the thematic area, and presented the results, conclusions

and recommendations to the EIT Governing Board in its meeting on 23 March 2017. Based on the results of the

analysis, and after considering all relevant circumstances, the EIT Governing Board decided to re-launch the call for

proposals in the area of Added-value Manufacturing in 2018.


Timely launch of the call Timely launch on 14

January 2016 and

closure in July 2016

Timely publication of the Call

in the OJ, on the Participants

Portal and the EIT website

Timely closure of the Call

Successful organisation of

the Info Day

Info Day held on 18

February with over 300

participants, 90%

satisfied or fully

satisfied with the

delivered content of the

event

Successful organisation with

over 400 registered

participants and above 90%

satisfied or fully satisfied with

the delivered content of the

event

26

1.2. Enhancing the EIT s i pact

1.2.1. The EIT s ne t Strategic Inno ation Agenda SIA -2027

As set out in the amended EIT Regulation, in 2016, the EIT started the preparations for the next draft seven-year

Strategic Innovation Agenda (SIA), which will include its long-term strategic objectives, operational priorities and

potential budget needs for the programming period from 2021 to 2027. The SIA will build upon initial impacts of the

EIT s and KICs acti ities, lessons learnt as ell as results a aila le of EIT re ie s and e aluations, as well as an analysis

of potential synergies and complementarities between the EIT s activities and other EU initiatives.

Timely designation of two

new KICs based on

transparent evaluation

Evaluation process

completed in November

2016

Designation package

issued to new KICs in Q4

2016

Evaluation report and GB

Decision on the designation of

EIT Food

GB Decision on the re-launch

of the Call in the area of

Added-value Manufacturing in

2018

Designation package was

issued to EIT Food

27

In 2016, the EIT prepared and the EIT Governing Board approved the roadmap for the development of the SIA, which

was aligned with the preparations for the future European Research and Innovation Framework Programme ( FP9 ).

This resulted in a shortened development process and earlier submission date for the EIT s draft SIA to the European Commission, as compared with the deadline foreseen in the EIT Regulation.

In addition, the EIT also adopted an outline of the main building blocks and chapters of the draft SIA document.


Relevant and timely

prepared roadmap and

draft outline of building

blocks

Approved roadmap for

the preparation of the

Draft SIA by Q3 2016

Roadmap for the development of

the EIT s ne t Draft SIA adopted in

Q3 2016 and outline of building

blocks /chapters adopted in Q4

2016

1.2.2 Fostering Knowledge Exchange through Communications, Dissemination and

Outreach

1.2.2.1. Fostering Knowledge Exchange through Communications and Dissemination

In the course of 2016, the EIT continued to focus its external communications activities on one overarching objective,

namely to increase the level of awareness, visibility and understanding of the EIT Community (EIT and its KICs) across

the European innovation landscape.

To achieve this, the EIT continued to implement the recommendations put forward in its Communications Strategy.

EIT external communications and dissemination activities focused on strengthening cooperation with EIT Climate-KIC,

EIT Digital and EIT InnoEnergy, providing support to EIT Health and EIT Raw Materials as well as welcoming EIT Food

to the Community. The EIT continued to work closely with all KICs to ensure the adoption and consistent use of the

EIT Co unit s rand identit introduced in Dece er .

The EIT also consolidated its digital communications portfolio and engaged more pro-actively with the media. As part

of the digital communications portfolio, a modern website for the EIT was launched in May 2014. This has supported

the EIT in presenting itself and its activities clearly and coherently. Supported by the deployment of latest

functionalities such as the multi-lingual option presenting key EIT information in all EU official languages in 2016, the

EIT website has become more user friendly by also facilitating a modern two-way interaction, thus enabling its

stakeholders to increase their level of understanding of and engagement with the EIT. This was confirmed in a user

satisfaction survey conducted in late 2016 with more than 70% of respondents either satisfied or very satisfied with

the content of the website. In addition to the new website, the EIT also strengthened its presence on social media

channels in order to engage more actively with its stakeholders.

To complement regular EIT high media impact events and milestones, such as the co erage of the EIT s annual Innovation Forum, INNOVEIT, in April 2016 (more than 100 articles/ broadcast information produced by the journalists

28

attending, all positive or neutral) and the designation of EIT Food in November 2016 (102 items of coverage across 13

countries including business, university website, regional and international media, 88% positive tonality), a new media

relations tools was introduced in 2016, namely the EIT Journalists Thematic Network. This gathering of 14 Tier 1

journalists resulted in 15 Tier 1 articles published, all positive or neutral and led to a further increase of the awareness

of the EIT Co unit s results and impact across Europe.


Increased level of

awareness among target

audiences of EIT

Community activities,

achievements and co-

operation possibilities

Communication plan

adopted by Q1 2016

EIT 2016 external communications

plan adopted

KIC InnoEnergy adopts EIT

Community brand and becomes EIT

InnoEnergy

EIT Food smoothly transitions from

FoodConnects to EIT Food and EIT

Community brand.

Quantitative and qualitative

increase in EIT media

coverage

Wider social media reach

and enhanced engagement

5% increase in positive

media coverage, incl.

press (print and online)

coverage of the EIT in

2016 compared to 2015

20% increase in the

number of unique users

“like the EIT Face ook and following the EIT

Twitter in 2016

compared to 2015

statistics

35 % increase in positive media

coverage (2,176 articles about the

EIT in 2016), 35% increase in

Facebook likes (12,264 likes on the

EIT Facebook page by end-2016),

and 42% increase in Twitter

followers achieved (12,265 by end-

2016) compared to 2015 figures

based on media and social media

monitoring reports

Quantitative increase in

visits to the EIT website

10% increase in unique

visitors to the EIT

website in 2016

compared to 2015

Unique visitor statistics:

2015: 175,740

2016: 214,074

19.6% increase compared to 2015

Online EIT website satisfaction

survey conducted in Q4 2016:

Very dissatisfied: 1%

Dissatisfied: 5%

Neither: 14%

Satisfied: 62%

Very satisfied: 12%

29

1.2.2.2. EIT Regional Innovation Scheme (EIT RIS)

2016 was the first year when a specific amount of the EIT grant was allocated for the implementation of the EIT RIS.

The EIT earmarked 10% of the annual competitive EIT contribution to the KICs for the implementation of KIC activities

within the EIT RIS. The total EIT grant allocated by the EIT Governing Board for the implementation of EIT RIS activities

in 2016 amounted to EUR 9.7 million.

In order to implement EIT RIS activities, KICs ran open calls for participation. The calls served as means to selecting

entities in the EIT RIS eligible countries that would cooperate with KICs in implementing EIT RIS activities and further

promote the knowledge triangle integration approach to local innovation actors. The calls included selection criteria

that required applicants to demonstrate excellent merits in promoting innovation and capacity for working with local

innovation actors in the scope of the EIT RIS. In addition, the selected entities had to demonstrate how they

thematically were aligned to the respective KIC area.

Throughout the year, KICs established cooperation with entities in 15 EIT RIS eligible countries: Bulgaria, Cyprus,

Malta, Serbia, Latvia, Portugal, Croatia, Czech Republic, Poland, Greece, Estonia, Hungary, Lithuania, Slovenia and

Italy. In total, by the end of 2016 various entities from 16 countries were cooperating with KICs within the EIT RIS,

including Romania. Thanks to the established cooperation with the entities in these countries, the local innovation

actors and individuals were able to benefit from a number of KIC activities and expertise. The activities to a large

extent have been focusing on professional and university education and business creation, for instance in ideation,

and start-up and scale-up support. During 2016, seven entities that over the past years had established cooperation

with KICs within the EIT RIS had become KIC partners.

The EIT grant earmarked for the EIT RIS activities served as a powerful impetus. Tapping into the created momentum,

in autumn 2016 the EIT held an EIT RIS stock-taking workshop with the participation of all KICs. During the workshop

KICs shared their approaches and experiences with implementing the EIT RIS activities. The workshop also allowed

KICs to discuss challenges and identify necessary improvements for the future in order to make the EIT RIS a better

focused and result-driven initiative. Following the workshop an EIT-KIC working group on the EIT RIS was established

to work on consolidation of the EIT RIS approach. At the end of the year, the work on drafting a consolidated EIT RIS

Guidance Note 2018-2020 was started. The revised approach will put a stronger focus on transferring KICs good

practices of the knowledge triangle integration to the EIT RIS eligible countries, foresee provisions for widening the

participation in KICs for entities that are not (yet) able to become KIC partners and deepen the cooperation with local

innovation actors through EIT Hubs and Co-location Centres. Furthermore, in 2017, KICs will develop their individual

EIT RIS strategies for the years 2018-2020 detailing their country strategies and clear targets and indicators. In parallel,

a cross-KIC EIT RIS activity, starting in 2017, was designed with an aim to allow KICs to implement joint EIT RIS activities,

thereby maximising its effects.

The KICs plans for the i plementation of the EIT RIS in 2017 were assessed by external experts and this had a direct

impact on the final grants allocated to KICs for 2017. The total allocation of the EIT grant for the EIT RIS implementation

in 2017 amounts to EUR 14.2 million.

30


Widening of participation

by EIT RIS target countries

in EIT activities

At least 4 target

countries under EIT RIS

joining the EIT RIS

activities

16 countries eligible for EIT RIS

are covered KICs EIT ‘IS activities

1.2.3. Fostering and Attracting Talent

1.2.3.1. EIT Alumni Community

One of the key milestones achieved in 2016 with regard to the development of the EIT Alumni Community was the

setting-up of the first EIT Alumni Board in April 2016, comprising a representative of each of the four KIC Alumni

Associations (Climate-KIC, EIT InnoEnergy, EIT Digital and EIT Health) and an EIT representative to provide guidance

and support. The EIT Alumni Board developed its strategy for the community and submitted the first work plan for

2016/2017 to the EIT Director. It adopted its rules of procedure and working arrangements and started the

implementation of activities.

The EIT implemented the EIT Alumni Connect Event in a timely manner and ensured the effective involvement of

Board members in the programme and its delivery. The main outputs of the event were the formulation of a shared

vision, mission and objectives for the EIT Alumni Community and the proposal of four pilot actions, which were

included in the work plan for the first year. The feedback received from students and alumni during and after the

event showed that the EIT CONNECT event continued to encourage alumni to share their ideas, knowledge and

experience in a cross-disciplinary way; to find partners for collaboration and contribute to shape the EIT Alumni

Community by proposing concrete ideas for implementation.

The EIT Alumni Community organised the second edition of the EIT Alumni Start-up Days in December 2016, which

brought together around 200 participants of different backgrounds to share ideas, form teams, build

products/services and embark on entrepreneurial adventures in Barcelona, Berlin, Eindhoven, Lisbon, Paris and

Stockholm.


Successful Alumni Connect

event, including ownership

by alumni representatives

Effective involvement of

EIT alumni in event

design, programme and

follow up and active

participation of 120

alumni from EIT labelled

educational

programmes (>75%

Alumni Connect event organised

successfully with 97 participants

attended with above 90% positive

feedback

2016 EIT Alumni Yearbook, input to EIT

Alumni Strategy and work plan and

activities started

31

positive feedback in

review)

Draft Programme for

2017 EIT Alumni

Connect event agreed

by Q3 2016

Programme outline for 2017 prepared

EIT Alumni governance

structure developed and

adopted

EIT Alumni governance

concept adopted by the

EIT by Q1 2016

First Board of Alumni

representatives elected

and secretariat

operational by Q2 2016

Action Plan for future

EIT alumni activities

proposed by Alumni

board and approved by

EIT by Q4 2016

EIT support for alumni

governance launched by

Q3 2016

EIT Alumni governance rules of

procedures adopted

First EIT Alumni Board established EIT

Alumni Strategy and Work plan for

2016/2017 prepared and adopted

Interim secretarial support provided to

EIT Alumni Board

1.2.4 Enhancing Stakeholder Engagement

1.2.4.1 Stakeholder engagement

During 2016, the EIT continued to directly engage with its institutional stakeholders, including the European

Parliament, European Commission services and EU Member States as well as other key stakeholders from across the

Knowledge Triangle in a structured, targeted and tailored manner. The main objectives of these encounters were to

raise awareness on the EIT Community and its activities as well as to showcase achievements and results. Some of the

encounters have been used to prepare for the discussions on the EIT future ambitions. Regular formal and informal

exchanges took place at all levels including EIT Governing Board Members, the EIT Interim Director and his staff and

on numerous occasions at the EIT Headquarters in Budapest, in Brussels and several Member States. For example, in

January 2016, the Chairman of the EIT Governing Board and the EIT Interim Director met Commissioner Moedas in

Brussels to discuss the links of the EIT to other EU innovation initiatives. In June 2016, the EIT Interim Director had the

opportunity to present the EIT Community and its activities to the Science and Technology Options Assessment (STOA)

32

Panel in the European Parliament. In October 2016, an EIT Awareness Day was organised in Kiev together with the

National Academy of Sciences of Ukraine (NASU) with around 30 local stakeholders from the knowledge triangle.

Furthermore, the EIT had regular meetings and information exchange with the European Association of Research and

Technology Organisations (EARTO) and the League of European Research Universities (LERU) as well as

BUSINESSEUROPE.

With regard to the stakeholder management tool, the contracted expert finalised his assessment and described

different options including the feasibility of those. Subsequently, the EIT Management decided to launch trials in 2017

for two of the options proposed in order to identify the most suitable tool for the EIT to support stakeholder mapping

and contact management.

In April 2016, the EIT organised the second edition of its annual Innovation Forum (INNOVEIT) and welcomed more

than 350 participants from across Europe and beyond. Business leaders, research and higher education experts, policy

and decision-makers, the media and EIT alumni came together to discuss opportunities for collaboration during the

EIT Stakeholder Forum, and celebrated the achievements of inno ators and entrepreneurs supported the EIT s Knowledge and Innovation Communities (KICs) during the EIT Awards. The wide range of participants ensured an open

dialogue with the EIT Community and added valuable perspectives. The Member State Configuration meeting

provided the opportunity for a structured dialogue with the EIT management and the management of the five KICs.

In total, 18 countries (19 representatives) participated. An analysis of the results of the feedback questionnaire has

been carried out and 94% of the participants responding to the questionnaire indicated that INNOVEIT 2016 was an

infor ati e and inspiring conference. Based on the detailed participants feed ack and a lesson-learnt exercise, the

concept was fine-tuned and specific needs were taken into account for the preparation of INNOVEIT 2017.


Structured dialogue

reinforced with institutional

and knowledge triangle

stakeholders

Updated mapping of key

stakeholders and events

of common interest in

place by Q2 2016

Participation of EIT

representatives

(including EIT Governing

Board members) in at

least 20 international

events of key

stakeholders

Reinforced structured

dialogue with institutional

and knowledge triangle

stakeholders

Mapping of key stakeholders

and key events

Participation of EIT in 21

international conferences

and high-level meetings with

key stakeholders

Stakeholder management

tool development contract

launched

Contract for the

development for a tool

to support stakeholder

mapping and contact

Finalisation of the experts

assessment in 2016, pilot

phase in 2017

33

management by Q4

2016

Targeted information

provided and dialogue with

key stakeholders

Positive, above-average

feedback received from

participants (as measured

by a dedicated survey)

Participation by at least

five knowledge triangle

representatives of all

three sides and 75% of

EU Member States

> 75 % of feedback

received above average

INNOVEIT 2016: 367

participants (target: 300)

Business Representatives: 29

Higher Education

Representatives: 26

Research Representatives: 12

MS Configuration: 18

countries, 19 representatives

(target 21)

94% positive feedback

1.2.4.2 Relations with Third Countries and International Organisations

In 2016, a number of meetings took place, for example the EIT welcomed the Adviser to the Vice President of the

National Academy of Sciences of Ukraine and a Delegation from the Moscow State University and the Russian Institute

of Advanced Study at the EIT HQ. Moreover, the EIT participated in a workshop organised by the World Economic

Forum (WEF) on Digital Ecosystems Europe in Berlin.


Establish structured

dialogues in targeted Third

Countries on knowledge

triangle integration issues

Structured dialogue set

up in at least two of the

targeted countries and

international

organisations by Q4

2016

Engagement with key stakeholders

in non-EU countries and

international organisations:

structured dialogue with the

National Academy of Sciences of

Ukraine which resulted in the

organisation of an EIT Awareness

Day in Kiev and establishment of

relations with the WEF

1.2.4.3. EIT Awards

The EIT implemented in a timely manner the EIT CHANGE, EIT Venture and EIT Innovators Award with the objective

to reward successful EIT innovations, entrepreneurial start-ups and graduates from EIT labelled education

programmes, to showcase EIT success stories and to enhance awareness about the EIT. The three first-wave KICs each

nominated two candidates for the EIT Venture and EIT CHANGE Awards as well as two teams for the EIT Innovators

Award. Unfortunately, a large number of KIC nominations for the EIT Innovators Award and EIT Venture Award did

not meet the criteria so that the competitions could not take place as intended. It was decided to formally withdraw

these Awards and immediately re-launch the call for nominations, although this meant that no monetary prizes could

34

be given due to the applicable rules of the EU Financial Regulations. The EIT Jury selected one winner per category.

The winner of the EIT Innovators Award 2016 went on to gain further recognition, including winning the MBR Global

Water Award in 2017.

The EIT A ards ere an integral part of the EIT s Inno ation Foru INNOVEIT 2016, which was held in Budapest

on 25-26 April 2016. The implementation of the 2016 EIT Awards comprised of a promotional campaign, the setting-

up of a high-level jury for each Award category, the organisation of the Award Ceremony and the implementation of

support packages for the winner of the EIT CHANGE Award to further develop his business initiative.


Timely implementation of

the 2016 EIT Awards

including a promotional

campaign and pitch

training session

2016 winners of all three

categories awarded and

prizes delivered by Q2/2016

Three 2016 EIT Awards winners

Prizes selected

An Award package was delivered

to the EIT CHANGE Award winner

The winners of the EIT Venture

and EIT Innovators Awards did not

receive an Award package as the

calls had to be re-launched

Timely launch and

nominations received for

the 2017 EIT Awards

competition

EIT CHANGE and EIT

Innovators Awards

launched by Q3 2016 and

nominations received by Q4

2016

EIT INNOVEIT and the EIT Awards

have been moved from Spring to

Autumn 2017. As a consequence,

the launch of the calls has been

postponed to Q1 2017.

1.3. New Delivery Mechanisms and Results-oriented Monitoring

1.3.1 EIT-KIC Relations

1.3.1.1. The Role of the EIT as an Investor and KICs Financial Sustaina ilit Strategies

2016 was the first full-year cycle when KICs implemented their Financial Sustainability strategies in line with the

Principles on KICs Financial Sustaina ilit adopted the EIT Go erning Board in . The EIT closely monitored the

implementation and provided guidance and recommendations to KICs based on their 2015 reports, 2017 Business

Plans and dedicated reports on financial sustainability with the help of a high-level external expert. A workshop was

held with KICs CEOs to take stock of progress in June 2016. Overall, although the quality and implementation of

financial sustainability measures vary from KIC to KIC, it should be noted that this challenge has been embraced by all

KICs, both top-down (strategy) and bottom-up (operations). A dedicated annex to the 2017 Business Plans was for the

first time introduced in 2016, where KICs report and explain revenue forecasts across a range of activities (e.g. ROI

and equity, Education, Services & Consulting, Alternative Funding Sources). In December 2016, the EIT Governing

Board requested from KICs, as part of strategic recommendations, an update on their financial sustainability

35

strategies, measures, assumptions and forecasts, including lessons learnt and proposals on how the EIT can further

support KICs in becoming financial sustainable.

The objective of the 7-year review (2010-2016) of the first wave KICs, i.e. EIT Climate-KIC, EIT Digital and EIT

InnoEnergy, is to assess, at the middle of the maximum 15-year main period of EIT funding to KICs against the baseline

set out in the KICs proposals su itted in 9, as ell as in su se uent KICs strategic agendas, usiness plans and reports, and relevant EIT legal framework (e.g. EIT Regulation, etc.), their delivery of the strategy, main results and

impacts from their designation until the end of 2016, including general and specific budget evolution, strengths and

weaknesses. This stock-taking exercise will also enable the EIT to draw recommendations for improvements both to

the EIT and to KICs as well as drawing lessons learnt and identifying good practices to be shared not only with the KICs

subject to the review, but also with the other KICs designated in 2014 and 2016. The review should also result in a

roadmap and approach for the remaining up to 7 years of EIT funding to KICs to complete their lifecycle, including

reflections on the EIT co-operation with KICs after the end of the main period of EIT funding to KICs (i.e. up to year 15

after a KIC designation). A detailed work plan was prepared in Q4 2016. The completion of the review is expected by

Q4 2017.

As stated in the EIT s Principles on KICs Financial Sustaina ilit , In cooperation ith other European, national and international organisations and the KICs, the EIT will strive to facilitate other forms of financing to KICs, namely

through a dedicated Fund. The EIT has follo ed this co it ent de eloping a proposal for a Growth & Impact

Fund. The goals and objectives of the future Growth & Impact Fund are, inter alia, to provide funding to invest into

early stage and scale-up development of innovative start-ups fro KICs pipeline and e ond; to le erage pu lic and private sector capital and other EU funding tools; and to fill gaps in current marketplace due to higher perceived risk,

market volatility and structural impediments. The EIT commissioned a report from a law firm with specialised expertise

with advice on the legal structure to establish a multi-compartment investment fund. The EIT conducted throughout

2016 numerous meetings and consultations with KICs, including a workshop with KICs CFOs, European Commission

(DG EAC, DG RTD, DG GROW), EIF, EIB and other stakeholders with a view to refining the concept of the Growth &

Impact Fund and launch a pilot tentatively in 2017/2018.


Reporting mechanism for

financial sustainability

strategies of KICs in place

First report on Financial

sustainability provided

in Q2 2016

Financial sustainability reports submitted by

KICs and performance assessment by EIT

KICs re enue forecasts in a dedicated Anne in the 2017 Business Plans

Introduction of a FS Coefficient in KICs

reports and Business Plans

Concept for 7-year review

of KICs in place

7-year review launched

by Q4 2016

Terms of reference of the 7-year review

prepared

Study on the legal

structure of the Impact

Fund

Study and clear

recommendations

completed by Q3 2016

Study on the legal structure of the Impact

Fund completed

36

Consultation with

stakeholders on draft

concept completed by

Q4 2016

Extensive consultations with KICs and other

stakeholders, namely European Commission

(DG EAC, DG RTD, DG GROW), EIF and EIB

carried out

1.3.2. Simplification

The Task Force Simplification (TFS) was set up in 2015 with the objective to propose improvement measures leading

to significant efficiency gains resulting in lower overhead and administrative workload for all sides, and therefore

ensuring improved operations and results. A first package of redesigned processes and uick ins were adopted at

the end of 2015 and early-2016 (e.g. code of collaboration, grant cycle essentials, etc.), whilst some other processes

took more time to redesign.

The TFS analysed the feasibility of introducing a multi-annual grant cycle in line with the recommendations of Special

Report 4/2016 of the European Court of Auditors, and concluded that multiannual grant agreements combined with

annual competitive funding allocations would not result in increased legal and financial security for KICs. Furthermore,

it would not lead to significant savings in operational workload due to annual Business Plan amendment and KIC

reporting obligations. Pre-condition for a genuine multiannual cycle is the possibility of committing grants which could

cover costs of activities for multiple years. This is not possible within the current EU multiannual financial framework;

however, it should be possible to implement for the post-2020 period, provided that commitment appropriations for

the EIT budget can be allocated in multi-annual tranches accordingly. Therefore, the TFS designed several measures

to maximise efficiency within the framework of current annual grant cycles.

A plan has been developed and implemented in order to reduce retroactivity as regards the signature of annual grant

agreements, applicable already for the 2017 grant cycle, i.e. KIC Business Plan assessment and EIT GB decision in Q3

and Q4 2016. The reengineered and efficiently managed grant allocation process resulted in a reduction in time-to-

grant and led to a timely signature of the 2017 grant agreements with KICs. The EIT signed the 2017 grant agreements

by mid-February 2017 with four of the five KICs and transferred the pre-financing payments corresponding to 70% of

the EIT grant awarded by end-February 2017.

The easure First ti e right reporting as tested as part of the KIC reporting and EIT report assess ent exercise in Q1-Q3 2016. Face-to-face resolution meetings were scheduled with each KIC as part of the process, with

the aim to discuss and conclude on outstanding issues, which reduced the scope and necessity of further follow-up

work, and as a consequence shortened the time needed for the approval of KIC Reports and execution of final balance

payments (i.e. shorter time-to-pay).

With the purpose to optimise the audit chain and eliminate overlaps among different layers of audit throughout the

grant cycle, the EIT decided to increase the assurance obtained from the first level of control by improving the quality

of Certificates on Financial Statements (CFS). For this reason, instead of requesting beneficiaries to procure and

contract CFS auditors, the EIT contracted two audit companies in Q4 2016 to carry out 128 CFS audits in Q1 2017 in

relation to costs declared under the 2016 grant agreements. This has reduced the perceived administrative burden

on KIC Partners and made the EIT-KIC model more attractive to industry and business participants.

37

Numerous new or updated guidelines have been issued, for instance on the entry and exit of KIC partners, uniformity

around business plan amendments, business planning and KIC reporting. Each time a consultation process took place

with KICs in the framework of the TFS.

The use of simplified cost options is encouraged by the EIT, the pre-condition being to agree on unit costs and lump

sums which KICs can apply in course of implementation. Unit costs for EIT education programmes have been accepted

by Commission Decision No C(2016)8298.


Feasibility of most promising

out of the box ideas for

simplification explored

Two feasibility studies


Agreed measures on

simplification implemented and

adopted by the EIT-KIC Forum

by Q4 2016

The TFS thoroughly analysed the

feasibility of a multiannual grant

cycle, and within the boundaries

of the current legal framework,

designed measures to implement

multiannual elements as much as

possible

The TFS designed numerous

improvement measures for

adoption by the EIT-KIC Forum

Roadmap of Task Force

simplification implemented

as planned

90% of the improvement

measures implemented by Q4

2016

Improvement measures

implemented as part of the grant

cycle, for example first time right

reporting, uniformity around

amendments, optimisation of

guideline consultation processes,

optimisation of audit chain

1.3.3. Monitoring, Impact Analysis and Evaluation

1.3.3.1. Implementation of the EIT monitoring strategy

The review of the EIT core Key Performance Indicators (KPIs) was finalised as planned in February 2016. As a result, the

EIT in a cooperation with the KICs developed a new set of 11 new results-oriented core KPIs to better address the EIT

intervention and the KICs activities. The following new KPIs were approved by the EIT Governing Board:

Graduates from EIT labelled MSc and PhD programmes

Start-ups created by Graduates from EIT labelled MSc and PhD programmes

Start-ups created as a result of innovation projects

Start-ups supported by KICs

38

Investment attracted by ventures that receive/have received KIC support

Products launched on the market (aligned with Horizon 2020)

Success stories submitted to and accepted by EIT

External participants in EIT RIS programmes

Budget consumption of KICs

Error rate of KICs

Financial sustainability of KICs

The new KPIs were integrated into the 2017 Business Plans guidelines and communicated to the KICs. Detailed

definitions and associated supporting documentation for the 11 new KPIs have been developed and agreed on over

the year in a cooperation with the KICs. The KICs have prepared their 2017 Business Plans based on the new set of

KPIs.

The Education Review has been finalised as planned. The main findings and recommendations were presented to the

EIT Governing Board members in the 44th EIT GB meeting on 8 December 2016. The review assessed the added value

and impact of the KIC educational activities and how they are measured, the efficiency and the effectiveness of the

EIT and its KICs to deliver on the strategic objectives as set out for Education in the amended EIT Regulation and

Strategic Innovation Agenda. The main finding of the report is that the most added value occurs when programmes

link the Education Pillar with the Innovation Pillar and the Business Creation Pillar, creating new forms of learning

experiences for students. According to the external experts involved in the review, the EIT s ridging role is not no el but it has put an exceptional emphasis on it. On the other hand, positive impacts are largely limited to the partners

themselves and not spreading to universities or businesses outside of the partnerships, except where a specific

outreach effort was made. In this sense, it is recommended to strengthen the unique cross-pillar activities as added

value, benefitting accelerator and business investor pipelines and thus identifying sources for sustainable funding.

Regarding the skills and competences, experts find graduates from EIT labelled programmes and other EIT learners

more international, more interdisciplinary and more entrepreneurial than regular graduates. These outcomes are the

result of the combination of prior learning, self-selection, selection processes, extra-curricular activities, the major

followed, the KIC Added Value Activities and the EIT community effect. The final report has a significant value for the

EIT as it provides many valuable recommendations for the future development of the education agenda.

The Innovation and IPR review has been rescheduled for 2017 due to conflicting priorities. The assessment will cover

all types of EIT funded innovation or research activities as implemented by the KICs and conducted between 1 January

2011 and 31 December 2016.

A comprehensive assessment of the implementation of Knowledge Triangle Integration (KTI) within the EIT and its KICs

was initiated in 2016. The assessment evaluates how KTI is elaborated in the vision and strategy of the KICs, CLCs and

the EIT, how KTI is implemented in the strategic and operational planning and in the practices of the KICs, and how

the role of the Co-Location Centres is shaped as focal point for KIC Activities. The assessment will provide insight in

the added value, efficiency and effectiveness of Knowledge Triangle Integration as concept to achieve the mission of

the EIT. In 2016, the Terms of Reference have been developed and four experts have been appointed to carry out the

Assessment. In addition, a Validation Group with three high level scholars has been assembled. In November 2016,

the kick-off meeting with the experts of the Assessment Team has taken place. The final report is expected to be

delivered in June 2017.

39

The EIT set up a risk-based Monitoring Plan 2016 with detailed monitoring activities for each KIC. The Monitoring Plan

2016 distinguished between two types of monitoring activities: monitoring activity of a particular KIC added-value

activity or project or a review of specific processes or features of the different KICs. Altogether 17 monitoring activities

were carried out of the 18 planned monitoring activities. In total, 19 on-site visits were conducted.

Following each monitoring visit, a set of recommendations was formulated and communicated to the KICs. Among

others, the following conclusions were reached: following the outcomes of the pilot monitoring visit of the

procurement procedures in EIT InnoEnergy and in order to verify the applicability of the new public procurement

directive in case of the KIC legal entities, it was recommended to conduct similar monitoring activities across all other

KICs in 2017; the KICs business acceleration activities are progressing very well and many good practices or potential

lessons learnt were identified; the implementation of the EIT RIS activities require more monitoring efforts in the

future by a cross-KIC taskforce chaired by the EIT; there is a need to have a more systemic approach towards

monitoring the selection of innovation projects by KICs (to be addressed in depth by the innovation and IPR review

that will be implemented in 2017).


Finalisation of result-based

KPIs for the EIT and

improved performance

measurement system

(scoreboard)

Timely finalisation of the

KPI review by Q3 2016

The EIT GB approved the new set of EIT

core KPIs in March 2016

Better evaluation and

understanding of existing

education agenda activities,

leading to improve the KIC

grant management process

in 2017.


education review in Q2

2016

Final report was approved by the EIT in

December and the recommendations

were submitted to the Education Panel

Assessment of Knowledge

triangle integration

practices in KICs with

specific focus on Co-

location Centres

Assessment launched by

Q3 2016

The Assessment was launched in

November 2016 through a kick-off

meeting with the experts of the

Assessment Team

Evaluation of KIC innovation

actions and Identification of

good practices of existing

KIC innovation activities,

including review of IPR

issues.


innovation review in Q3

2016

The implementation of the innovation

review was postponed for 2017

Conduct of risk based

monitoring activities by EIT

staff

Monitoring plan

adopted and

implemented

17 monitoring activities carried out with

19 on-site visits

40

Contribution of monitoring

activities to improving KIC

the grant management

Mid-term reviews with 5

KICs organised by Q3

2016

Database of reports and

recommendations from monitoring

activities established

1.3.3.2. Evaluation and impact assessment

The EIT launched in October 2016 a study and an analysis on the global and European impact of the EIT and its KICs

from 2010 to 2016, conducted by an external contractor. The study is foreseen to be published in the Q2 2017. The

launch of the impact study was slightly delayed because the scope of the study was extended and in order to ensure

proper alignment with the objectives, work plan and timeline of the mid-term evaluation of the EIT carried out by an

external consultant contracted by the European Commission. The impact study will identify and describe the main

factors through which the EIT and its KICs have economic and societal impact and in particular demonstrate how: 1)

The EIT and its KICs add alue to Europe s econo ic gro th, co petiti eness and societ at large, including the glo al dimension; 2) Impactful and novel is the innovation ecos ste for Europe as proposed the EIT and its KICs societal challenges are addressed by the EIT community; and 3) The EIT funds innovation; by taking into consideration the

uniqueness of the EIT-KIC model.


Timely launch and

completion of an impact

study together with KICs

Final report available by

Q4 2016

Launch of the Impact Study in Q3 2016

Inception Report of the Impact Study

delivered in December 2016

1.4. Horizontal activities

1.4.1 Strategy: Co-ordination and implementation

1.4.1.1. EIT Governing Board meetings and EIT management

The EIT provided support to the EIT Governing Board including the smooth running of, and follow up to, Governing

Board and Executive Committee meetings as well as GB Working Group meetings and advisory activities to the GB

Chairman, GB Members and the Director.

In 2016 the EIT Governing Board held six meetings in Budapest and adopted 36 decisions. Five new EIT Governing

Board members were selected and appointed in 2016, based on open calls for expression of interest, further to the

end of terms of office of four GB members and one resignation. The Executive Committee met five times in Budapest

in 2016 to prepare the Governing Board meetings. Additional extraordinary Executive Committee meetings were not

organised.

41


Quality of collaboration

between the members of

senior and middle

management measured by

the number of meetings in

2016

Number of and

participation in meetings of

the EIT Strategy Working

Group

Preparation of Strategy

Notes on key elements of

the EIT/KIC model

Ongoing feedback

collection among senior

and middle

management to assess

quality of collaboration

and to identify areas of

improvement

The EIT Management Team met on a weekly

basis, complemented with meetings of

Strategy Working Group, ad-hoc project

oriented cross-unit meetings as needed and

quarterly review workshops

Effective preparation and

implementation of

Governing Board (GB) and

Executive Committee

meetings, GB Working

Groups meetings, Panel and

other meetings with GB

Members participation

Effective and timely

preparation and

implementation of at

least 4 regular GB

meetings, 4 regular

Executive Committee

(ExCo) Meetings, Annual

KIC Hearing and GB-KIC

Spring workshop

in compliance with all

applicable rules and

procedures

Six Governing Board meetings and five

Executive Committee meetings organised in

2016

Timely selection and

appointment of four new

EIT GB members

New EIT GB members

appointed by Q3 2016

Five new Governing Board Members

appointed (four due to end of terms of office

and one due to resignation)

1.4.1.2. Planning, Programming and Reporting

The EIT implemented its annual cycle of planning, programming and reporting processes in compliance with the

applicable rules and regulations. As regards full financial autonomy of the EIT, the Commission formally launched the

process on 30 June 2016 by requesting the EIT to complete a detailed self-assessment questionnaire. The EIT

submitted the completed questionnaire and supporting documents end of October 2016. After reviewing the

responses and documents submitted, the Commission carried out a fact finding visit in January 2017. Based on the

work done in 2016, the Commission is expected to be in a position to decide on the EIT full financial autonomy in

2017.

42


Timeliness (preparation and

submission) of the

documents foreseen in the

SPP (Strategic Planning and

Programming) cycle,

namely Budget, Annual

Activity Report, Budget

implementation report,

Report on budgetary and

financial management and

Single Programming

Document

Budget 2017, Draft

budget 2018, AAR 2015,

Budget implementation

report 2015, Report on

budgetary and financial

management 2015

produced and

transmitted on time

EIT Governing Board

adopts the Single

Programming Document

2018-2020, Budget

2017 and Draft Budget

2018 by mid-Dec 2016

AAR 2015, Draft SPD 2018-2020,

Budget 2017, Draft budget 2018, Report on

budgetary and financial management 2015

adopted in 2016 by the deadlines foreseen

in the EIT Financial Regulation

Timeliness (preparation and

submission) of internal

quality reporting

On time delivery of

accurate internal

reports (ad-hoc,

monthly or quarterly)

and bi-monthly

summary reports for the

Commission and GB

Monthly budget execution reports

mentioning the deviation to the forecast

produced

Monthly procurement reports with

comparison to the forecast produced

Bi-monthly activity reports for Commission

and GB produced


the Annual Work

Programme 2016

90% of activities

implemented by Q4

2016

Internal AWP 2016 implementation report

produced

Timely granting of the full

financial autonomy by the

European Commission

Full financial autonomy

granted by Q4 2016

Self-assessment carried out in 2016 and

Commission fact-finding visit took place in

January 2017

1.4.1.3. Internal control and risk management

In line with the EIT Financial Regulation, the EIT budget has been implemented in compliance with effective and

efficient internal controls. To achieve this, the EIT implemented the internal control standards. These processes are

applicable to all levels of management and designed to provide reasonable assurance in order to maintain

effectiveness, efficiency and economy of operations, achieve reliability of reporting, safeguard assets and information

and prevent, detect, correct and follow up fraud and irregularities

43


Achieves a high level of

implementation of Internal

Control Standards

90% of internal control

standards are

implemented and

weaknesses in

remaining standards are

identified and action

plan in place by Q4 2016

Annual review of implementation of ICS

carried out

Critical risks are identified

and addressed

Critical risks are

identified in the Annual

Work Programme and

action plans to address

them are in place

80% of

recommendations from

the audit follow up

register are closed

Critical risks identified in the Annual Work

Programme part of the SPD 2017-2019

Risk register updated

Audit follow up register updated on a

quarterly basis


the actions foreseen in the

EIT Anti-Fraud Strategy

100% actions planned

for 2016 implemented

by Q4 2016

Anti-fraud survey and trainings organised

for staff and improved conflict of interest

assessment for GB members. 60% of the

actions planned for 2016 implemented, the

rest is ongoing in 2017.

1.4.2 Internal Communication and work environment

1.4.2.1. Action plan for improving the internal communications

The EIT has improved its internal communication and teamwork to efficiently manage the challenges set out in the

Annual Work Programme and to achieve a high level of staff satisfaction. Regular staff meetings were organised

generally on a monthly basis to inform staff on priorities, results and latest developments. Two social events were

organised in June and December, respectively, as well as a team building event to increase cohesion and improve

teamwork. The results of the staff satisfaction survey conducted in December 2016 shows an impressive improvement

compared to 2015, as the overall rate of staff satisfaction has increased from 50% to 69%.


Efficient internal

communication structures

are in place.

90% of measures

implemented of the

internal

communications action

plan by Q4 2016

Actions planned for 2016 in the internal

communication plan largely implemented

44

Improved level of staff

satisfaction

10% average increase of

staff satisfaction by mid

end 2016 compared to

previous year

Annual staff survey satisfaction survey

showed an increase of overall satisfaction

from 50% to 69%

Staff Committee in place

Successful events organised

by the Social Committee for

improved team building at

EIT

Staff Committee in

place by Q2 2016

2 events, including one

team building,

organised with positive

feedback by

participating staff

Decision was taken to establish a joint Staff

Committee with CEPOL (in 2017)

Social and team building events completed

1.4.3 Administrative support

1.4.3.1. Human resources management

The EIT has essentially achieved full staffing through a series of measures that were implemented in the last three

years and substantially improved the staff management, recruitment process, reduced turnover and improved the

work environment. During 2016, the EIT recruited 16 new staff members, 9 among them to reinforce the core

operational unit (Partnerships Management), 3 to the other operational unit (Policy and Communications) and an

additional 4 to support Procurement, Finance, IT and the Director s Office. As of 31 December 2016, 59 of the 63

authorised positions were filled. This is a significant improvement compared to the situation as of year-end 2015 when

the EIT employed 50 staff. For further details on HR management, please, refer to section 2.4.


Timely and compliant

completion of selection

procedures.

Publication of the

vacancy notice within 6

weeks of a vacant post

and completion of

reserve lists within 8

weeks from the

deadline for

applications

16 staff recruited in 2016; 59 posts filled as

of 31 December 2016. The average time

needed for establishing reserve lists for

vacancies published in 2016 was 17

weeks.

Identification of in-house

training courses in the

learning and development

plan

90% of training sessions

provided according to

plan

All eight in-house training sessions

completed as planned

45

Timely and correct payment

of salaries

100% of salaries paid

correctly and in time

Salaries transferred on time

Trainees support EIT

activities and increase

knowledge of EIT

At least 6 traineeships

successfully completed

in 2016

Eight traineeships successfully completed


the revised EIT Schooling

policy

Revised EIT Schooling

policy implemented by

Q2 2016

Revised policy adopted by EIT

1.4.3.2. Finance and Procurement management

For details on budgetary and financial management, please, refer to section 2.3.


High level of absorption of

EIT funds

Legality and regularity of

Commitments and

payments

> 90% of non-grant

commitment and

payment appropriations

absorbed by Q4

For <5 % of

commitments and

payments errors are

detected ex post

94.87% of authorised commitment

appropriations implemented

99% of authorised payment appropriations

implemented

For ex-post error rates in grant payments,

please, refer to section 2.5

Efficient and effective

financial procedures

100% review of

procedures by Q2

New Vade-mecum, workflows, templates

and revised relevant EIT decisions adopted

in 2017. The focus has been on key

financial procedures.

Efficient and effective

procurement procedures

completed

85% procurement

procedures completed

in line with the 2016

procurement plan by Q4

(subject to the initiation

of the operational units)

including 100% of the

prioritised procurement

procedures

Less than 10% of

procurement

All procurement procedures completed as

planned with the exception of the activities

that have been (partially or fully)

postponed to 2017 or cancelled.

118 procedures were planned for 2016, 80

contracts were signed in 2016,

9 procedures were cancelled and 29

postponed to 2017.

No new Court cases or complaints against

procurement procedures in 2016

46

procedures trigger

complaints / court

cases.

Timely and correct delivery,

compliance and

comprehensiveness of the

EIT accounts

Submission of final

accounts for 2015 by Q2

All payments carried out

<2 working days after

authorisation by RAO.

Final Accounts for 2015 adopted on time

Payments made from EIT account on the

same day of authorisation (99.15%)

Timely development of the

EIT policy on the use and

selection of external

experts

Policy on the use and

selection of experts

approved by Q2 2016

Policy adoption postponed to 2017

Timely acquisition of a

budget planning and

monitoring tool

Budget planning and

monitoring tool in

acquired and in use by

Q4 2016

Budget management tools Bluebell and

Speedwell acquired and put into

production in Q4 2016

1.4.3.3. Management of ICT and Document Management

Throughout 2016, the EIT ensured that adequate IT tools and infrastructure, IT security and document management

are in place.


Adequate IT and infrastructure tools

available to staff made available

including data network operations,

help desk, PC/Client support,

software support, Systems

administration and programming,

voice communications, web

publishing, Internet access, and

printing. Individualised ICT services

for staff members include inter alia:

desktop/thin client and mobile

computers, Intranet (SharePoint

based) access, remote data access,

mobile phones and e-mail

management

Make general and

individualised IT

systems

permanently

available to all staff

as required,

In 2016, the IT infrastructure and the

IT services were consolidated and

remote access and mobility features

were made available to EIT staff

improving working flexibility and

efficiency. The ticketing system was

improved and the resource time

allocated for each ticket or incident

has been introduced.

Downtime of the IT systems were

limited to normal maintenance

operations and incidents had an

impact within the expected target

level.

47

Hours of continuous downtime of

systems minimised and timely

response to user requests provided

Open call launched for development

and maintenance of IT services

Maximum one hour

downtime of system

per incident and

<5% of user

requests require

more than one day

to resolve

New framework

contract in place by

Q3 2016

One incident occurred in 2016 that

took more than one hour to resolve.

3.66% user requests required more

than one day to resolve in 2016 (26

out of 709).

Open call for IT services was

postponed to 2017.

Improved IT governance through

implementation of the IT action and

audit plan

Sound and comprehensive IT

change management process

established

High level of security of IT

operations

90% of actions from

the IT action plan

implemented,

including all high

priorities by Q4

At least 6 meetings

of the IT Steering

Committee with

concrete decisions

Change

management

process to be in

place by Q2 2016

Clear access policy

in place by Q1 2016

Security weaknesses

identified and

Improved IT Governance and

procedures in place.

IT actions that required

procurement: 91% completed (31 out

of 34);

IT service delivery actions 100%

completed;

IT Steering Committee related actions

75% completed;

IT security actions 50% completed.

In 2016, there were 5 ITSC meetings

and decisions were made available

through the meeting minutes

A Change Management Policy

including an IT Change Procedure was

drafted in 2016 and adopted in 2017

1.

An Access Policy was adopted in 2016

IT management/audit software for

infrastructure monitoring (SPLUNK)

installation turned out to be included

48

actions to address

them remedied by

Q4.

in the CERT-EU services and postponed

in 2017. To cover the auditing needs, a

lighter software was acquired and

installed.

Checkpoint Security was acquired in

2016 and installation expected to be

finalised in Q1 2017

The VEEAM Disaster Recovery

environment was setup and installed in

Q4 and the recovery services are in

place

CERT-EU Security services were

acquired in Q3 2016 and a vulnerability

test was performed in Q4 2016

Reliable and comprehensive

implementation of DMS

Timely revision of Policies and

Practices in line with the action plan

following the IAC recommendations

(DMO, LSO, LISO and DPO related

tasks)

Comprehensive

DMS operational by

Q4 2016

At least 60% of

actions

implemented by Q4

2016

Definition of the business owner and

business administrator of the IT tools

Update of the functional mailboxes

Preparation of a file note on handling

of physical mail

Timely revision and

comprehensiveness of the Reporting

and Business Planning modules

Reporting 2015 (Q1)

and Business

Planning 2017 (Q3)

IT tools fully in use

and users trained.

Upgraded Reporting (2015) and

Business Planning (2017) modules of

the EIT grant management system put

into production on time

Specifications for future IT tool

developments completed,

supporting alignment with new FPA

and Horizon 2020.

Technical

specifications

developed for core

business knowledge

management tools,

i.e. KIC partner

management and

monitoring

Partners In-and-Out (PIO) module of

the grant management system

developed and put into production in

2016

Timely development of the EIT-KIC

Business Intelligence Tool

Fully-fledged

reliable Business

Further development of the Business

Intelligence module of the grant

49

Intelligence tool in

place by Q3 2016

management system postponed to

2017

1.4.3.4. Logistics and Building Management

Throughout 2016, the EIT provided staff with a functional, attractive and safe working environment, an adequate level

of logistics support, sufficient office supply stocks management, and proper level of building security.


Accurate assets register in

line with physical

use/storage

Up-to-date ABAC ASSET

Inventory with >98%

accuracy

All assets are registered in ABAC Assets

Response time to building

and security-related issues

>98 % of building and

security related

incidents are reported

to the external building

management within one

working day

There were five cases (incidents and

malfunctions), reported to the facility

management within one working day.

All incidents reported to the external

building manager were closed in the

financial year.

Test evacuation of the building was regular.

No significant security incident reported.

Incoming and outgoing

mails registered and

expedited timely and

efficiently

Adequate stock of office

supplies

Mails sent on the same

day as provided and

mails received are

registered and

distributed on the same

day based on revised

procedures by Q2 2016

Stable provision and

availability of quality

office supplies without

disruption (continuous)

Mails sent, received and registered without

delay

Guideline on mailing was elaborated

Office supplies provided on time. Stock was

monitored continuously.

Timely and compliant

completion of works and

availability of adequate

work places (business

continuity)

Office modernisation

works carried out by Q3

2016

Procurement procedure on office

modernisation work was not successful,

thus this action was postponed to 2017

New office furniture purchased in 2016

50

Office repainted and

design upgrade


Exhibition of KIC

innovations in place by

Q4 2016

Reallocation of small number of offices

completed without interruption of daily

work

1.4.4 Internal Audit Capability

See section 2.6.2. on the assessment of audit results and section 2.7 on follow up to IAC recommendations and

action plans for IAC audits.


Timely preparation of the

IAC audit plan

Audit plan adopted by

the EIT GB by March

2016

Audit plan for 2016 adopted by the GB

Timely production and

transmission of IAC audit

reports

Submission of the

reports to the Director

and to the Governing

Board by end 2016

Reports on audit findings and

recommendations in line with the audit plan

51

PART II

MANAGEMENT

2.1. EIT Governing Board

The 12 appointed members of the EIT Governing Board are appointed by the European Commission, providing a

balance between those with experience in business, higher education, and research. They have a four year non-

renewable term of office. The EIT Governing Board members act in the interests of the EIT, safeguarding its goals and

mission, identity, autonomy and coherence, in an independent and transparent way. The EIT Governing Board is

assisted by an Executive Committee composed of four Governing Board members, including the Chairman of the EIT

Governing Board, plus an observer from the European Commission. The EIT Governing Board also had three additional

members representing the Knowledge and Innovation Communities until September 2016, when the EIT Governing

Board decided to propose to the European Commission a modification of the structured strategic dialogue between

the EIT Governing Board and KICs. The EIT proposed to the European Commission to replace the permanent

Representative Members with more effective means of communication such as inviting the Chairpersons of the KICs

for an annual strategic discussions with the EIT Governing Board. In addition, the EIT Governing Board proposed

further modifications in the EIT Regulation in particular in the governance structure and decision making process.

In 2016 the EIT Governing Board held six meetings in Budapest and adopted 36 decisions, including a simplified and

fine-tuned Rules of Procedure in mid-2016. Five new EIT GB Members were appointed in 2016 further to the end of

terms of office of four GB members and one resignation. Subsequent to open calls for expressions of interest in

November 2015 and May 2016, the European Commission appointed four new GB Members in the field of business

and one member in academia.

The Executive Committee met five times in Budapest in 2016 to prepare the Governing Board meetings. Additional

extraordinary Executive Committee meetings were not organised. In November 2016, following hearings with

applicants for the 2016 Call for KIC Proposals, the EIT GB designated EIT Food as a new member of the EIT Community.

In December 2016, a hearing with the five KICs designated in 2009 and 2014 was held to assist the Governing Board

in reaching a decision on the annual financial allocation to the KICs for the financial year 2017.

In accordance with the transparency principle, the decisions of the EIT Governing Board have been published on the

EIT website. The EIT Governing Board hosted special guests in some of their meetings, in particular, Commissioner

Navracsics who joined the 44th EIT Governing Board meeting in December 2016 to exchange views on the future of

the EIT.

In 2016, EIT GB Members were also active in representing the EIT with speaking engagements at high level prestigious

conferences and events to enhance visibility of the EIT in the European innovation arena.

52

2.2. Major Developments

In 2016, the EIT made significant efforts to mitigate the impact of the reduction in its multi-annual budget on the

activities of the KICs. For the period of 2014- , the udget of the EIT, as an integral part of Horizon , the EU s Framework Programme for Research and Innovation, was initially established at EUR 2.7 billion. Within the multi-

annual financial framework, the indicative budget for 2016 was EUR 336 million. However, as result of the proposed

Regulation for the establishment of the European Fund for Strategic Investments this budget was proposed to be

reduced to EUR 200 million. Due to the joint efforts of the EIT, its KICs and the European Commission, the EIT budget

cuts have been reduced significantly and the final EIT budget for 2016 was EUR 285 million. Although the reduction

was still substantial compared to the indicative budget, the EIT was able to maintain the previous level of funding

provided to its KICs and ensured that KICs inno ation acti ities do not suffer a significant set ack.

Five new EIT GB Members were appointed in 2016 further to the end of terms of office of four GB members and one

resignation. Subsequent to open calls for expressions of interest in November 2015 and May 2016, the European

Commission appointed four new GB Members from the field of business and one member from academia.

Another major development was the negotiation and conclusion of the new Framework Partnership Agreements with

the five KICs, as described in Part 1 of this report.

2.3. Budgetary and Financial Management

Planning

The EIT s ediu -term priorities were specified in its rolling Triennial Work Programme (2016–2018), replaced by

the Single Programming Document as of 2017-2019, which are translated into annual work programmes and financing

decisions. Both multi-annual and annual working programmes are adopted by the EIT Governing Board on the basis

of proposals by the EIT Director.

Implementation

Since June 2011, the EIT has been partially financially autonomous, which means that in 2016 the EIT s partner

Directorate-General at the European Commission (DG EAC) continued to provide consultation and ex-ante verification

of contracts in two areas: 1) each step of KIC grant management and 2) procurement procedures above the threshold

of EUR 60,000.

In 2016, the EIT achieved a high rate of implementation both for commitment and payment appropriations owing to

more regular monitoring by the management and certain efficiency gains in the workflows. The authorised budget for

commitment appropriation was implemented at 94.87% (2015: 90.58%) and for payments at 99.00% (2015: 96.49%).

In 2017, the EIT intends to further improve and make its budgetary planning, monitoring and implementation

processes more effective and efficient by 1) further simplifying the existing procedures and systems making them

more appropriate to the needs of management and staff and 2) providing more guidance and practical trainings for

staff members.

Detailed figures on budget execution are presented in Annex II.

53

Amendments and transfers

The EIT budget was amended twice during the 2016 financial year. Four transfers below the limit established by the

EIT Financial Regulation were approved by the EIT Interim Director.

Carry-over/re-entry from previous financial year(s)

Carry-over of appropriations from 2015 to 2016 on decision

The EIT Governing Board decided to re-enter appropriations cancelled in 2014 and 2015 instead of carrying over them.

Re-entry of appropriations from 2014 and 2015 to 2016 on decision

In its decision on budget amendment No 1/20167 of 29 July 2016, the EIT Governing Board decided to re-enter

appropriations, which were cancelled in 2014 and 2015, for the financial year 2016.

The decision by the EIT Governing Board concerned the re-entry of commitment and payment appropriations

cancelled. Both commitment and payment appropriations re-entered were fully consumed in 2016.

Appropriations cancelled in 2014 were re-entered and consumed in 2016 in full. Part of the appropriations cancelled

in 2015 was re-entered in 2016. The remaining part of appropriations cancelled in 2015 was booked on Title 4, where

EIT collects cancelled appropriations not needed in the financial year. Title 4 allows to monitor the use of cancelled

appropriation and be in line with the derogation for following the three-year rule8.

Table – Implementation of appropriations re-entered from 2014 and 2015 to 2016

7 Decision 22/2016 (02745.EIT.2016.I.GB.WP) 8 According to Art of EIT F‘: “Appropriations hich ha e not een used the end of the financial ear for hich the ere entered shall be cancelled. Given

the needs of the EIT, the cancelled appropriations may be re-entered in the estimate of revenue and expenditure up to the following three financial years, in

accordance ith Article .

from 2014 from 2015 total

B3-000 KIC grants 5,227,645.00 15,874,179.84 21,101,824.84 21,101,824.84 100.00%

Total 5,227,645.00 15,874,179.84 21,101,824.84 21,101,824.84 100.00%

B4-001Cancelled appropriations for year n-1

not used in year n- 9,012,879.42 9,012,879.42 - 0.00%

Total - 9,012,879.42 9,012,879.42 - 0.00%

GRAND TOTAL 5,227,645.00 24,887,059.26 30,114,704.26 21,101,824.84 70.07%

Commitment appropriations, EUR (1)Budget

l ineBudget Item Description

Commitments

made, EUR (2)

% Committed

(2/1)

from 2014 from 2015 total

B3-000 KIC grants 225,936.64 2,319,432.28 2,545,368.92 2,545,368.92 100.00%

Total 225,936.64 2,319,432.28 2,545,368.92 2,545,368.92 100.00%


not used in year n4,520,339.39 4,520,339.39 - 0.00%

Total - 4,520,339.39 4,520,339.39 - 0.00%

GRAND TOTAL 225,936.64 6,839,771.67 7,065,708.31 2,545,368.92 36.02%

Payment appropriations, EUR (3)Budget


Payments made,

EUR (4) % Paid (4/3)

54

Automatic carry-over of appropriations corresponding to obligations duly contracted

Pursuant to Article 14 (5) of the EIT Financial Regulation, non-differentiated appropriations, corresponding to

obligations duly contracted at the close of the financial year, must be carried over automatically to the following year.

89.07% of the non-differentiated appropriations, namely the administrative appropriations carried over from 2015 to

2016 were paid, which represents an adequate level of execution, taking into account the nature of these expenses.

However, the estimation of amounts to be carried over has to be further improved in 2017.

On Title 1 budget lines, 86.88% of appropriations carried over were paid.

The implementation rate on Title 2 appropriations (89.96%) primarily derives from expenses related to the security,

postal and telecommunication costs, and travel costs of EIT Governing Board members, which by nature are difficult

to estimate.

Budgetary commitments on Title 3 budget lines corresponding to obligations duly contracted and not or only partially

paid at the closure of the financial year were carried forward from 2015 to 2016. The execution rate of 87.14% for

operational expenses was mainly due to the following: KICs could not fully absorb the 2015 grants and the actual cost

of grant and monitoring experts and the annual EIT Innovation Forum INNOVEIT event were lower than expected.

RAL situation at the end of the financial year

RAL volumes vary considerably. This is a consequence of the time lag between commitment and payment rather than

a problem specifically relating to a particular EIT activity. The amount of outstanding commitments as of 31 December

2016 was EUR 99.7 million, representing for the most part 2016 grants awarded to KICs for which the final balance

will be paid in 2017. The year-end RAL amounts have decreased by 6.59% compared to 2015.

Table – Evolution of RAL, EUR

Management information system

The EIT used the following software during the 2016 financial year:

ABAC Workflow for budget management, budgetary accounting;

SAP for financial accounting (general accounting);

Datawarehouse for financial reporting;

ABAC Assets for fixed asset management;

Budget Title 2016, EUR 2015, EUR 2014, EURChange from 2015

to 2016, EUR

Change from 2015

to 2016, %

1 Staff expenditure 195,744.78 142,521.13 423,618.26 53,223.65 37.34%

2 Infrastructure and operating expenditure 393,105.69 353,718.65 456,489.29 39,387.04 11.14%

3 Operational expenditure 99,080,598.35 106,207,327.81 119,889,026.51 7,126,729.46- -6.71%

TOTAL 99,669,448.82 106,703,567.59 120,769,134.06 7,034,118.77- -6.59%

55

MiMa for mission management;

EIT grant management system and colla oration platfor “DUNA for su ission of KICs usiness plans and reports.

Reporting

Budget execution was reported to the EIT Management on a quarterly basis with deviations from budget execution

targets by budget chapters, thereby identifying mitigating actions if and when needed. In addition, the

implementation of the EIT Annual Work Programme was continuously monitored. These allowed for corrective actions

to be taken where needed to optimise the utilisation of available human and financial resources. Comprehensive

budget reports were made available to the organisation on the EIT Intranet. The allocation of financial resources was

reviewed once in July and re-allocations were formulated where required.

2.4. Human Resources (HR) Management

In 2016, the EIT recruited 15 staff members and one seconded national expert (SNE), which brought the total number

of staff to 59 on 31 December 2016 (an increase by nine compared to end-2015) with 6 ongoing selection processes.

The EIT has stepped up its efforts to fill the remaining vacant posts and this trend is expected to continue in 2017. The

recruit ent of the EIT staff as in line ith the EIT s o jecti es and priorities as outlined in the Multi-annual Staff

Policy Plan of the Institute.

In terms of job screening, the majority of posts belong to the operational or neutral activities (70%), whereas the

administrative support and coordination roles correspond to 30% of all posts. In total, 37 out of 63 posts have been

identified as operational (59%), while 7 posts have been categorised as neutral (11%). In addition, 8 posts (13%) are

classified in the coordination category and 11 posts belong to the administrative support role (17%).

In terms of legal basis, the implementing rules on implementation of telework at EIT were adopted, as well as the

revised implementing rules on working time and part-time work. In addition, rules on reclassification of both

Temporary Agents and Contract Agents were adopted. The Governing Board has also approved the implementing

rules concerning leave on personal grounds and unpaid leave for Temporary and Contract Agents.

In the area of learning and development, in order to offer benefits to the individuals and the organisation as a whole,

in-house training sessions on Ethics & Integrity, Fraud prevention and detection, Project management, Key

Performance Indicators, Horizon 2020 on Financial Management and Audit, Data protection and Hungarian language

courses were organised, in addition to a team building activity and courses attended individually by staff members on

external locations.

The positive developments in 2016 concerning staff turnover (2015: 17%, 2016: 13%) and vacancy rates (2015: 17%,

2016: 6%) do not negate the fact that EIT is structurally understaffed. As confirmed by the European Court of Auditors

in their Special Report No 4/2016 on the EIT, the amount of grant managed per person at the EIT is significantly higher

than for any other EU research grant programme. While the budget managed per staff member under FP7 was

between 12.5 and 20.4 million euro, the EIT project officers manage annual grants up to 90 million euros. This is

without considering the monitoring of the complementary funding of KICs as the EIT finances a maximum of 25% of a

56

KIC s udget. The resulting high orkload and responsi ilit has a serious effect on staff turno er affecting the core business of the EIT.

While the EIT managed three Knowledge and Innovation Communities (KICs) from 2010 to 2014, two new KICs started

their operations in 2014 and a further one has been designated in 2016. The amount of grant managed by the EIT has

increased from 16 million euros (2010) to 300 million euros (2017), while the number of beneficiaries (KIC Partners)

has increased fro to ore than 9 . Further ore, the EIT s udget ill increase to ore than million euros in 2018, which will naturally lead to additional work to ensure legality and regularity of transactions and

compliance with the principles of sound financial management. In addition, the EIT has taken on board new activities

to de elop its strong inno ation potential, related to the preparation for an I pact Fund to support KICs Financial Sustainability and attract funding for the EIT and its KICs under the European Fund for Strategic Investments (EFSI)

and invest further into innovative companies, the EIT Regional Innovation Scheme for areas in Europe with lower

inno ation capacit and outreach and s nergies ith other progra es such as the EIT s cooperation with the Joint

Research Centre and Copernicus programme. Following its education review, the EIT also has identified further

potential for it to lead the transformation of human capital in Europe and contribute to the skills agenda in the areas

of entrepreneurship and innovation. The EIT will not be able to take these new tasks, which were not foreseen in the

initial establishment plan of the EIT, further without additional resources.

The number of posts available to the EIT has not followed the significant growth of budget and activities (see chart

below).

65

97

142

234

280293

337

52 52 58 60 60 63 65

2011 2012 2013 2014 2015 2016 2017

EIT budget managed vs EIT staff authorised

EIT budget managed (MEUR) EIT staff (authorised)

57

2.5 Assessment by Management

This section reports on and assesses the elements identified by management that support assurance on the

achievement of the internal control objectives. In order to ensure control effectiveness as regards legality and

regularity, the EIT has set up internal control processes intended to ensure the adequate management of risks relating

to the legality and regularity of the underlying transactions. The control objective is to ensure that EIT has reasonable

assurance that the total amount of any financial operation authorised during the reporting year which would not be

in conformity with the applicable contractual or regulatory provisions does not exceed 2% of the authorised payments.

Ex-ante verification

In compliance with the EIT Financial Regulation, ex-ante verification was carried out on all financial transactions

(commitments, payments, recoveries etc.) by the EIT staff member designated to perform this task. Errors detected

during these checks were documented on a checklist and corrected before the transaction was approved. This

contributed to the sound financial management of the EIT budget and the legality and regularity of the financial

transactions.

As stated above, the EIT has een partiall financiall autono ous since June , hich eans that the EIT s partner

Directorate-General at the European Commission (DG EAC) continued supporting the EIT, by way of ex-ante

verification of all KIC grant transactions and also of high-value procurements carried out by the EIT exceeding EUR

60,000. These prior consultations provided a second level of assurance for the Authorising Officer.

Ex-ante measures applied to grant transactions

The EIT consistently carries out ex-ante verification of both commitment and payment transactions. In 2016,

numerous guidelines were made available providing detailed instructions to KICs, for example Guidelines on the

preparation of KIC Business Plans and Budgets (Grant Agreements 2017), Guidelines for the preparation of KIC Reports

(Grant Agreements 2015) and guidelines for the EIT funded part of KIC management costs. The EIT became part of

the Horizon 2020 programme as from January 2014 and therefore became part of the H2020 Participant Guarantee

Fund which is an additional overall financial risk mitigating measure. The methodology for certificates on financial

statements is fully aligned with H2020 and it is stipulated in annex of the Grant Agreement.

In 2016, final balance payments were executed thereby closing grant agreements for 2015. The EIT performed the

technical and financial assessment of all final reports to assess the adequacy of the implementation of Business Plans

and to establish the final balances due.

In line with its revised and improved grant assurance strategy, the EIT combined its sources of assurance by either

performing a desk check on a sample of supporting evidence and/or by requesting Certificates on the Financial

Statement (CFS) by independent auditors. All exceptions and weaknesses identified by the CFS auditors were followed

up with the KIC during the ex-ante assessment process, which led either to the acceptance of the costs reported

following the receipt of further supporting evidence, or alternatively corrections being made by the EIT. After

examining the CFSs issued by the auditors, the EIT carried out an analytical review of information received as part of

the cost reports. When deemed necessary, follow up questions and requests for supporting documentation were sent

to the KICs in the framework of the ex-ante assessment process. Starting from the 2016 EIT-KIC Grant Agreements,

EIT will procure the CFSs centrally instead of obtaining them through KIC Partners, thereby reducing the „auditing and

administrative urden on KICs, while increasing the level of assurance obtained at the same time

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Furthermore, the EIT carried out a pilot monitoring activity on the procurement procedures of EIT InnoEnergy and

made targeted recommendations for improvement in this historically error-prone area. EIT InnoEnergy implemented

the recommendations in 2016, revised its procurement policies and procedures and provided training to its staff in

charge of procurement, which will lead to an increased assurance starting from 2017. Similar monitoring activities will

be conducted for all other KICs in 2017. Finally, the EIT introduced principles of good governance in the new

Framework Partnership Agreements signed in 2016. Compliance with these principles is monitored on a continuous

basis.

Details of the expenditure/partner coverage for first-wave KICs 2015 grant are shown in the following table:

EIT Digital EIT InnoEnergy EIT Climate KIC Total

EIT grant request (EUR) 66,791,565 67,987,470 87,181,133 221,960,168

EIT grant approved and paid (EUR) 66,757,297 67,295,082 85,084,502 219,136,881

EIT grant approved and paid (% of grant

requested)

99.9% 99.0% 97.4% 98.7%

EIT grant covered by CFS (EUR) 58,162,777 54,728,205 74,408,584 187,299,566

EIT grant covered by CFS (%) 87.1% 80.5% 85.3% 84.4%

Number of partners / linked third

parties claiming EIT grant

100 202 162 464


parties covered by CFS

41 29 41 111

% of partners / linked third parties

covered by CFS

41.0% 14.4% 25.3% 23.9%

Details of the expenditure/partner coverage for second-wave KICs start-up grants are shown in the following table:

EIT Health EIT Raw Materials Total

EIT grant request (EUR) 3,298,985.75 3,822,040.00 7,121,025.75

EIT grant approved and paid (EUR) 3,298,912.14 3,815,420.83 7,114,332.97

EIT grant approved and paid (% of grant

requested)

100.0% 99.8% 99.9%

EIT grant covered by CFS (EUR) 1,398,174.66 2,465,201.00 3,863,375.66

EIT grant covered by CFS (%) 42.4% 64.5% 54.3%


parties claiming EIT grant

23 23 46


parties covered by CFS

2 3 5

% of partners / linked third parties

covered by CFS

8.7% 13.0% 10.9%

As a result of the ex-ante verification procedures described above, the EIT rejected costs that had not been supported

by sufficient and appropriate evidence and reduced the EIT grant paid accordingly. Taking into consideration the high

coverage and the generally good quality of CFSs, combined with the analytical review carried out by the EIT, it can be

59

concluded that the assurance provided by the EIT ex-ante assessment as regards the legality and regularity of

expenditure is reasonable.

Ex-post verification of grants

To obtain reasonable assurance on the legality and regularity of the expenditure reported by the KICs and with a view

to detecting and correcting errors, the EIT has developed and implemented an ex-post audit strategy. This

complements ex-ante controls embedded in the KICs grant management processes.

Ex-post audits of cost reports relating to EIT-KIC grant agreements are performed by an external service provider

selected using a Framework Contract of the European Commission. The audit methodology has been devised by the

EIT and the external audit service provider carries out on-the-spot audits based on the audit programme provided by

the EIT and reports on the results. KIC Partners to be audited are selected by the EIT primarily on the basis of risk

assessment to maximise the efficiency of the resources spent on ex-post audits, while a certain part of the sample is

selected randomly to increase the representativeness of the sample.

Ex-post audits of cost reports related to Grant Agreements 2015 were performed by an external service provider on

the basis of the Framework Contract of the European Commission. In accordance with the audit methodology devised

by the EIT, the 28 KIC Partners audited (11 for EIT Climate KIC, 11 for EIT InnoEnergy and 6 for EIT Digital) were selected

by the EIT primarily on the basis of a risk assessment in order to maximise the efficiency of the resources spent on ex-

post audits. The risk-based audit sample was complemented by a random sample in order to ensure a more

representative coverage of KIC Partners over the duration of the Framework Partnership Agreements. The external

audit service provider carried out the on-spot audits based on the audit programme provided by the EIT and reported

the results to the EIT. The process was completed in May 2017. The audited grant covered 17% of the total grant paid

for the Grant Agreements 2015. As a result of the ex-post audits, the detected error rate equals to 1.18%. The residual

error rate after ex-ante and ex-post controls is 0.98%.

As the residual error rate of 0.98% is below the materiality level of 2% established in the EIT s control strateg , the EIT considers that grants paid as part of 2015 Grant Agreements are free from material errors.

Exception reporting, analysis of internal control weaknesses or control failures recorded

In 2016, the EIT followed its standard operating procedure on exception reporting. All instances of overriding controls

or deviations from established processes and procedures are documented in exception reports. Instances of non-

compliance events are documented in non-compliance reports.

In 2016, three exception reports and twelve non-compliance events were recorded. The total value of the exception

and non-compliance events amounted to EUR 5,654,245 (2015: EUR 7,140,586). However, EUR 5,500,000

representing 99.7% of the total value, related to a single event. This particular event relates to an administrative delay

of the legal basis that has been corrected in 20169.

The exception reports for 2016 addressed administrative delays occurred for grant agreement amendments, FDI

extensions and procedures regarding simplified costs used by KICs. The non-compliance events for 2016 mainly

concerned administrative errors for budgetary and legal commitments.

9 The exception report refers to the application of simplified cost for Grant Agreements 2015, while the approval of the related EC decision was yet

ongoing. The related decision was approved in December 2016.

60

Mitigating measures have been put in place to address the internal control weaknesses identified in the exception

reports and non-compliance events registered during 2016. For instance, the EIT continuously updates and improves

its financial circuits, workflows, checklists and routing slips. Fraud prevention and detection

In order to reinforce a strong anti-fraud culture and actively encourage dedicated fraud prevention actions designed

to the specifics of the EIT s acti ities, the EIT has de eloped an Anti-Fraud Strategy for the period of 2015-2017, having

regard to the costs and benefits of the measures to be implemented. As a result, the EIT Anti-Fraud Strategy and the

related action plan were adopted by the EIT Governing Board on 9 November 2015. This Anti-Fraud Strategy is part

of the EIT s internal controls s ste and meets the requirements of Article 48 of the Framework Financial Regulations

of the European Commission, which refers inter alia to the need of preventing and detecting irregularities and fraud.

It is valid for three years and will be updated in the course of its implementation - if necessary - or after its assessment,

at the end of the implementation period.

As part of the activities to implement the EIT's Anti-Fraud Strategy, an internal survey on antifraud knowledge among

the EIT staff was launched in November 2016, benchmarking the antifraud awareness; a mandatory in-house training

anti-fraud was organised for all staff in December 2016. In this regard, basic training sessions in the field of fraud

prevention and detection for newcomers (EIT staff, trainees, interim staff, members of the Governing Board of the

EIT and KICs representatives) were also organised in 2016; an annual assessment on conflict of interest situations for

members of the EIT Governing Board was performed at the beginning of 2016 and related mitigating measures were

identified and implemented when required. Furthermore, an assessment on the conflict of interest exercise 2016

regarding the members of the EIT Governing Board for the Business Plan 2017 and KIC Call 2016 was conducted in

September-November 2016. Different in-built mitigating measures for risks related to the financial allocation to the

KICs for 2017 were identified and implemented.

2.6 Assessment of audit results during 2016

2.6.1 Internal Audit Service (IAS)

The IAS carried out an audit on the 2014 call for KIC proposals in April 2015. Following an adversarial procedure, IAS

issued a final audit report in January 2016. Although no critical or very important recommendations were made, IAS

recommended some improvements for the selection procedure to be used in the 2016 Call for KIC proposals. The EIT

set up an action plan that was accepted by IAS as appropriate. Throughout 2016, the EIT has implemented all of the

actions as part of the process of the 2016 Call for KIC proposals.

IAS carried out a second follow-up audit in October 2015 to review the implementation of actions stemming from the

“li ited re ie perfor ed IAS in . In the follo -up audit report issued in January 2016, the IAS confirmed

significant improvement in the EIT procedures and closed most of the open recommendations with the exception of

three actions out of the original 25. During 2016, the EIT has implemented the remaining three actions as well.

Therefore, EIT has implemented all 25 actions based on recommendations from the Internal Audit Service, thereby

improving the grant management procedures significantly.

61

Furthermore, IAS carried out an audit in April 2016 on “Transition to Horizon . The audit co ered the legal transition to the Horizon 2020 rules and regulations as well as the Start-up Grants provided to the two second-wave

KICs designated in 2014. The final audit report was issued in December 2016 with three recommendations (none of

them being critical). The EIT has accepted the recommendations and set up an action plan that has been accepted by

IAS as appropriate. The EIT will implement the actions in 2017.

2.6.2 Internal Audit Capability (IAC)

Annual Audit Plan 2016

The IAC sent its draft 2016 Annual Audit Plan, prepared on the basis of a risk assessment update, to the EIT Audit

Committee and EIT Interim Director for comments on 16 December 2015. The EIT Governing Board approved the plan

on 17 February 2016.

Execution of the plan

In line with its Annual Audit Plan, the IAC carried out three assignments in 2016, including an Audit on Information

Technology (IT), a consultancy on potential efficiency gains in the field of Human Resources Management (HRM) and

a follow-up to past consultancy assignments. During its assignments, the IAC issued 41 new recommendations in 2016,

including 8 rated as very important, 11 as important and 22 as desirable. The EIT s anage ent has accepted all recommendations resulting from the 2016 IAC assignments.

The Audit on IT was finalised on 15 December 2016. The scope included IT governance, IT security, IT services, IT

project management and data management. The audit concluded that the internal control system in place provides

reasonable assurance regarding the achievement of the business objectives set up for IT, except for the following very

important issues: 1. Disaster Recovery Plan; 2. IT security; 3. Dependence on supplier; 4. User account management;

5. IT project management and 6. Data management. Management accepted all recommendations and drew up an

action plan to address the above weaknesses.

The consultancy on efficiency gains in HRM was finalised on 1 September 2016 and contained twenty

recommendations. Two that were rated as very important concern the documentation of HR procedures and overview

of applicable rules as well as the HRM strategy. Management accepted all recommendations and drew up an action

plan to address the above weaknesses.

The scope of the 2016 follow-up included 43 recommendations stemming from the following six IAC assignments:

2014 consulting on Vacancy Management, 2014 consulting on Procurement, 2014 letter to management on Treasury

Function, 2014 letter to management on Management of Sensitive Functions, 2014 consulting on the Management

of the risk of Conflict of Interests and a 2015 letter to management. Out of 43, the IAC closed twelve

recommendations, including four rated as very important. Furthermore, taking into account the reduced risk, a critical

recommendation has been downgraded to very important.

Key Performance Indicators (KPIs)

62

The KPIs for the Internal Audit Capability were set by the decision of the EIT GB adopting the 2016 Annual Work

Program for the EIT as follows:

Indicator (as per AWP) Target (as per AWP) Comment

Timely preparation of the IAC

audit plan

Audit plan adopted by the EIT

GB by March 2016

Target

achieved.

Timely production and

transmission of the IAC audit

reports

Submission of the reports to the

Director and to the Governing

Board by end-2016

Target

achieved.

2.6.3 European Court of Auditors (ECA)

Financial (discharge) audit on year 2015

The ECA issued a ualified opinion on the EIT s accounts on the asis that all the transactions underl ing the annual accounts are legal and regular in all aterial respects , e cept for one specific issue relating to the use of

indirect cost rates for universities, research organisations and SMEs in the 2014 grant agreements. The ECA was of

the opinion that EIT was not allowed to reimburse indirect costs of these organisations based on a 40% flat rate, as

was the rule and practice from 2010 to 2013, but should have used a 25% flat rate starting from 2014, as established

in the new rules approved in December 2013.

The EIT and European Commission disagreed ith the Court s interpretation of the applica le legal asis and did not

accept that the EIT had made irregular payments to KICs. The Horizon 2020 legal basis explicitly provides for

transitional measures, which were fully applicable to the EIT as of 1 January 2014, since the EIT is an integral part of

Horizon 2020. Consequently, in the opinion of the EIT, payments based on a 40% flat rate to reimburse the indirect

costs of universities, research organisations and SMEs were legal and regular under the 2014 grant agreements. The

ECA considered that the EIT should not have applied transitional arrangements as these arrangements did not apply

to the Institute. However, the EIT launched the 2014 grant allocation process in spring 2013, when the new rules were

not yet known. Therefore, the EIT considered it necessary and justified to apply the transitional provisions provided

for. It is also important to note that this was a one-off issue applicable for the transitional year of 2014 only (transition

to Horizon 2020). Starting from 2015, the EIT has used the 25% flat-rate for indirect costs as stipulated in the Horizon

2020 regulation.

The EIT and DG Education and Culture requested formally the legal opinion of the Legal Service of the Commission

and the Budgetary Control Committee of the European Parliament asked for the legal opinion of the European

Parliament s Legal Ser ice as ell. Both legal opinions supported the interpretation of the EIT as regards 2014 grant

agreements. Based on the positive legal opinions, the Budgetary Control Committee voted in favour of granting

discharge to the EIT in respect of the implementation of the 2015 budget in March 2017. Finally, the European

Parliament granted discharge following a vote in the plenary session on 27 April 2017.

Financial (discharge) audit on year 2016

63

The European Court of Auditors carried out t o audit issions at the EIT in the conte t of auditing the EIT s annual accounts for the financial year 2016. The second audit mission took place in April 2017 and the final audit report is

not available as of finalising the present Annual Activity Report. The European Court of Auditors preliminarily reported

certain irregular payments related to procurement procedures carried out by KIC Legal Entities in 2015. The

preliminary observations of the European Court of Auditors may have an impact on the final error rate reported by

the Court for year 2016 but are subject to a legal analysis and a contradictory procedure at the time of writing this

report.

Performance audits

In 2016, the European Court of Auditors published two Special Reports affecting the EIT.

Special Report No 4/2016 titled “The European Institute of Innovation and Technology must modify its delivery

mechanisms and elements of its design to achieve the expected impact as pu lished on April . The EIT, KICs and Co ission agreed on a detailed action plan to address the Court s reco endations and this action plan as endorsed by the EIT Governing Board in its meeting on 2 June 2016.

The EIT has already implemented more than 50% of the actions stemming from the recommendations of the ECA

Special Report and is on track to implement the rest by the deadlines set. The key actions implemented are as follows:

Amendment of the EIT Regulation removing the 25% funding condition: The EIT Governing Board agreed on

the main changes in the EIT Regulation and the EIT sent its formal request to Commissioner Navracsics in

February 2017. The Commission has launched the legislative procedure accordingly.

Measuring leverage: A new KPI system focussing on results and impact, including investment attracted by

ventures that have received KIC support, was introduced in 2016 and is used as from Business Plans 2017.

KICs financial sustaina ilit reporting has been mainstreamed in the grant reporting process as from the

2016 grant agreements.

Early signature of Grant Agreements: As a result of a simplified process and efforts by both EIT and KICs, Grant

Agreements 2017 were signed and a 70% pre-financing was paid by EIT in February 2017, thereby reducing

significantly the time-to-grant.

EIT financial autonomy: The EIT completed its self-assessment in 2016 and a Commission fact-finding visit

took place in January 2017. The decision of the European Commission is foreseen for 2017.

Rules tailored to the KICs needs: Special IPR and liability rules have been included in the new Framework

Partnership Agreements signed in 2016. Eligibility of capital expenditure for KIC Legal Entities and Co-location

Centres has been included in the 2017 grant agreements. Simplified costs have been developed and adopted

the Co ission for the KICs education acti ities. Multi-annual Grant Agreements: Following a detailed legal and technical analysis, involving the Commission

(DG Education and Culture and DG Budget), the EIT and KICs decided jointly that introduction is not feasible

in 2018 due to major operational constraints and lack of real added value. However, a pilot for 2019-2020

will be further explored. Pre-condition for a genuine multiannual cycle is the possibility of committing grants

which could cover costs of activities for multiple years. This is not possible under the current EU multiannual

financial framework; however, it should be possible to implement for the post-2020 period, provided that

commitment appropriations for the EIT budget can be allocated in multi-annual tranches accordingly.

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EIT staffing: The EIT has essentially reached full staffing (59/63 at year-end 2016) following a series of

measures taken to reduce staff turnover (e.g. appraisal and reclassification system in place) and to improve

the efficiency of selection/recruitment procedures.

Single audit approach: Under the 2016 grant agreements, EIT procured the Certificates on Financial

Statements (CFS) instead of KIC Partners, thereby reducing the „auditing and administrative burden on KICs,

while increasing the level of assurance obtained at the same time.

The remaining actions all on track and are being implemented jointly by EIT and KICs.

Special Report No 12/2016 “Age ies use of gra ts: ot al a s appropriate or de o stra ly effective as pu lished on 21 April 2016. The audit concluded that agencies audited, including the EIT, in general awarded and paid grants in

compliance with the rules. However, the Court has made five recommendations to all agencies for improvements in

the way agencies manage grants. The EIT has accepted the relevant and applicable parts of all five recommendations

and has implemented them as follows.

Simplified costs ha e een esta lished and adopted the Co ission in for the KICs education activities.

The EIT has included in its Single Programming Document 2017-2019, containing the Annual Work

Progra e , infor ation on the KICs o jecti es and e pected results for 2017.

The EIT has established formal internal procedures for the selection and designation of KICs as well as for the

annual allocation of EIT contribution to established KICs respecting the principles of transparency and equal

treatment and safeguarding against potential conflicts of interest.

The EIT has strengthened its ex-ante verifications on grant implementation (e.g. centralised procurement of

Certificates on Financial Statements, etc).

The EIT has introduced a new set of results-oriented KPIs.

2.7 Follow up of IAC recommendations and action plans for IAC audits

The IAC issued eight very important recommendations in 2016, six resulting from the audit on IT and two from the

consulting assignment on human resources management. All eight recommendations have been accepted by the EIT

Management and are being implemented in 2017. No critical recommendations have been issued in 2016.

As regards the status of implementation of critical and important recommendations from IAC audit reports issued in

previous years, seven critical and eight very important recommendations are in progress to be implemented by the

end of 2017. The open recommendations relate to the risk management process, document management and

monitoring of activities.

2.8 Follow up of observations from the Discharge authority

In response to the European Parliament decision of 28 April 2016 on discharge in respect of the implementation of

the budget of the EIT for the financial year 2014, the EIT informed the Discharge Authority of follow-up actions taken

65

and progress made in respect of observations made by the European Parliament on 14 October 2016. In particular,

the following actions have been taken in order to address the observations of the European Parliament.

Concerning the e phasis of atter paragraph in the Court s audit report on the EIT s accounts for 2014, the EIT

obtained audit certificates on costs of KIC complementary activities incurred in 2010-2014 by 31 March 2015 and

compliance with the 25 % ceiling set out in the Framework Partnership Agreements has been verified on the basis of

final figures. On the basis of the audit evidence collected on KIC complementary activities, the EIT has confirmed that

the EIT funding provided to the three KICs in years 2010-2014 has not exceeded the 25% ceiling set out in the EIT-KIC

Framework Partnership Agreements.

As regards budgetary and financial management, the EIT has reduced its carry-overs to a minimum (EUR 350k in 2015)

and to planned carry-overs only (i.e. invoices received in January for services provided in December Year N-1). As

regards grants, the EIT is actively using its derogation to optimise the implementation of the EIT budget. The

operational activities of the KICs, such as Masters and Doctoral education programmes or long-term research and

innovation support projects, are by nature multiannual and this is reflected by a derogation specific to the EIT. This

allows the EIT to re-enter any cancelled appropriations into its budget in the following three years. This derogation is

designed to opti ise the i ple entation of the EIT s udget, hich is ainly used for grants provided to the

Knowledge and Innovation Communities. This provision also reflects that support for innovative actions can by nature

not be linearly planned, i.e. there has to be flexibility to stop innovative projects that do not work or to redirect them.

Innovation activities carried out by the KICs are dynamic and fast-reacting in nature. Certain innovation projects or

plans that are included in the KICs Business Plans, and therefore in the grant agree ents, a turn out to ha e less

potential than expected and have to be cancelled during the implementation of the grant agreements.

The EIT can also report an advanced stage of implementation of performance based and result-oriented budgeting as

well as the use of key performance indicators in performance measurement. A major part of the EIT budget, around

95%, is implemented by the KICs through grants. Up to 50% of the grants are allocated performance-based as a result

of a competitive funding allocation process, and one of the two pillars of the funding allocation process measures the

past performance of the KICs using key performance indicators. This methodology will be maintained and further

improved in the coming years and the EIT will allocate an increasing share of its budget to KICs fully based on

performance via the competitive funding allocation process.

In respect of the reco endation of the European Parlia ent to “consider a tighter schedule of reductions in the

a i u of the I stitute s o tri utio to a KIC , the follo ing is worth noting. While the EIT Regulation allows the

EIT contribution to cover up to 100 % of the total eligible costs of KIC added-value activities, and the Principles on

KICs Financial Sustaina ilit , adopted the EIT Go erning Board, foresee a reduction in this maximum rate only after

ears fro a KIC s designation, KICs alread pro ide su stantial co-funding to finance their KIC added-value

activities. As regards the EIT-KIC Grant Agreements 2015, i.e. in the sixth year of their operations, the three first-wave

KICs (Climate-KIC, EIT Digital and KIC InnoEnergy) provided a co-funding of almost 24 million euro, which covered

approximately 10% of the costs of their KIC added-value activities. This co-funding rate has been on an increasing

trend and it is expected to achieve 20% earlier than year 10 of the operations of the first-wave KICs. Furthermore, the

EIT continues to onitor the KICs progress to ards financial sustaina ilit and held a orkshop ith KIC CEOs in June 2016. As a result of the workshop, targeted recommendations were made to KICs in order to strengthen their financial

sustainability strategies and actions. In addition, the EIT will carry out a 7-year review with a particular focus on the

implementation of the first- a e KICs financial sustainability strategies in 2017.

66

As regards the EIT s procure ents, in addition to the reinforcement of the procurement team, the EIT has developed

a comprehensive Vade-mecum on procurement including checklists for different procurement procedures and

specific contracts under framework contracts.

In line with the Code of Conduct adopted for EIT Governing Board members, the annual declarations of interests and

independence of EIT Governing Board members have been published on the EIT website. The EIT has also published

on its website the declaration of interests of the EIT Interim Director and Heads of Unit (i.e. senior manager and middle

managers).

The level of detail in the technical assessment of the implementation of KIC activities has already improved

significantly in comparison with previous years. As a result of improved guidance provided by the EIT to the KICs,

Business Plans for 2014 and onwards provide significantly more details on each planned KIC added value activity.

Moreover, a more ro ust ethodolog is no in place to assess the KICs performance based on the reporting. The

European Court of Auditors has accepted this action as co pleted during their audit of the EIT s accounts for the financial year 2015.

The EIT has continued to work towards realising efficiency gains with other institutions. In addition to the existing

cooperation with CEPOL, another EU agency based in Budapest, the EIT has signed a Memorandum of Understanding

with ERCEA, the European Research Council Executive Agency, in order to share the use of their budget planning tool

and paperless payment workflow system. In order to reduce costs in the area of public procurement, the EIT

participates in a number of inter-institutional procurement procedures of the European Commission and of other

agencies. Furthermore, the EIT uses several of the Commission's framework contracts for ordering services in order

to achieve efficiency gains in its procurement activities.

The follow-up to other observations of the Discharge authority, such as on EIT staffing and implementation of internal

audit recommendations, are reported in Part II of this report above.

67

PART III

ASSESSMENT OF THE EFFECTIVENESS OF THE INTERNAL

CONTROL SYSTEMS

3.1. Risk management

EIT uses the principles and main elements of the European Commission's risk management methodology. In light of

the risk associated with the EIT s acti ities, the risk management exercise is performed yearly, covering all EIT

activities. The EIT revised and updated its Standard Operating Procedure on Risk Management, which is now fully in

line with the applicable guidance of the European Commission.

The 2015 risk register re ie identif ing the ost significant risks in the EIT s register as follo ed up in 6. The

EIT risk register follows the template recommended by the Commission and risks are categorised on the basis of the

Commission risk typology. The EIT risk register contains the actions planned to address the risks, including who should

perform them as well as the target dates for completion. The implementation of the action plan was monitored

throughout 2016 to ensure it continued to be effective and relevant. To this end, the EIT risk register and action plans

are reviewed by the EIT Management on a regular basis and in particular as part of the preparations of Annual Work

Programmes and Annual Activity Reports. Moreover, in 2015, the EIT Interim Director put in place a consolidate audit

register, which is reviewed on a quarterly basis and maps all outstanding audit recommendations with deadlines and

actions required to address them.

As the grants a arded to the KICs represent the largest share of EIT s operational udget above 90%), an adequate

identification and management of the risks associated ith the KICs planning and implementation of their Business

Plans is crucial. The revised EIT grant assurance strategy in particular contributes to the improved assurance in this

critical area (see more details in Section 1.1.1.1).

Specific risks associated with the management of grants are at the level of the EIT and KICs.

At the level of KICs:

Inherent risks linked to the multiplicity of organisations and systems, involved in diverse operations;

Inherent risks related to the relationship between the KIC LE and its partners and the governance of KICs;

Inherent risk deriving from the start-up phase of new KICs;

Inherent risk deriving from the complexity and nature of KIC added-value activities;

Risks related to the fact that the quality and accuracy of the certificates on financial statements produced by

external parties is not always satisfactory;

Risks related to the transition to the new Framework Partnership Agreement and rules of Horizon 2020.

At the level of the EIT:

Risks related to the reliability of the KICs internal control systems;

Risks related to the limited staff capacity at the EIT and the relatively high staff turnover.

68

These risks have been mitigated by:

Guarantees built into Grant Agreements provisions;

Continuous guidance provided to KICs in terms of performance and financial matters, including improved

Business Plan and Reporting guidelines;

Close follow-up of the i ple entation of the KICs added-value activities;

Ex-ante verifications such as the assessment of performance and cost reports;

Ex-post verifications;

Development of a comprehensive monitoring strategy, an annual monitoring plan and reviews on priority

issues;

Increase of EIT staff capacity;

Establishment of a process to review, update and improve all EIT procedures;

Task Force for Simplification developing measures to improve efficiency and effectiveness of grant

management;

Principles of good governance included in the Grant Agreements 2015 and in the new Framework

Partnership Agreements 2016;

Preparations of a new Framework Partnership Agreement with KICs.

For further details on risk mitigating actions implemented in 2016, please, refer to Annex VII.

3.2. Compliance and effectiveness of Internal Control Standards (ICS)

With its Decision No 3/2010, the EIT Director decided to apply the prevailing Internal Control Standards applicable to

the European Commission, hich is ased on international good practice. The EIT s ain o jecti e is to aintain the appropriate balance between the risks to be addressed and the controls required for minimising the risks.

EIT has put in place the organisational structure and the internal control systems suited to the achievement of the

control objectives, in accordance with the standards and having due regard to the risks associated with the

environment in which it operates.

In conclusion, the internal control standards are effectively implemented with the exception of certain areas where

further improvements are under way. These concern in particular the further improvements needed in the areas of

grant management, internal procedures and staff capacity as outlined in the below table. As adequate mitigation

actions are under way, the remaining weaknesses do not qualify for a reservation in the annual declaration of

assurance.

69

No Title Description of weakness and

risk Potential impact Mitigating action under way

1 Grant

assurance

and EIT staff

resources

Grant management at the

level of KICs is controlled by

the EIT s grant assurance strategy. However, in the

past a number of

weaknesses and errors have

been detected in the

financial and operational

reports by KICs. This has led

the Court of Auditors to

issue a qualified opinion on

the legality and regularity of

transactions at the EIT for

the financial years 2012 and

2013 and 2015. Despite

various measures taken to

improve the management

and control systems of KICs,

error rates have remained at

a level close to 2%. In this

context, the EIT will not be

able to significantly reduce

the level of error rates in the

future for the following

reason:

- New KICs are being

created and although

they take on board

lessons learnt, at least

during the early stages

of a KIC life cycle when

it is being set up and

until it reaches full

maturity, errors due to

learning processes and

time required to set up

control systems are

likely to occur.

- Innovation activities are

inherently risky and

have an in-built

The three risk factors

mentioned taken

together (KIC

management and control

systems, inherent risk in

innovative activities and

EIT staffing constraints)

will mean that there is a

high likelihood of

qualified opinions by the

European Court of

Auditors in the future.

This can in turn lead to

the fact that the

European Parliament

may not grant the

discharge to the EIT and

reputational damage

occurs, which prevents

the EU from supporting

the EIT with the

necessary resources to

reach its ambitions and

objectives.

With the same number

of resources and in the

light of an increase in its

budget and number of

KICs, the EIT cannot

increase its checks and

controls and maintain

low error rates without

reducing other

operational activities.

Significant steps have been

taken by the EIT to address

the errors and identified

weaknesses and the control

systems are improving, as

confirmed by the unqualified

audit opinion of the

European Court of Auditors

for the financial year 2014

and the discharge granted by

the European Parliament in

2015 and 2016.

The revision of the EIT grant

assurance strategy, the

implementation of the good

governance principles for

KICs and implementation of

the recommendations of a

targeted re ie of KICs procurement procedures in

2017 and various other

measures leading to

efficiency gains have further

contributed to reach and

maintain a relatively high

level of assurance and low

error rate.

With the support of the

Commission and the EIT

Governing Board, the

European Court of Auditors

will be requested to compare

the error rates and work of

the EIT with other Research

and Innovation programmes

of Horizon 2020 rather than

with other EU Agencies that

may have a different

operational risk profiles (e.g.

due to not managing grants)

70

likelihood of failure and

require flexibility. They

cannot be planned and

delivered with the same

level of risk as other

programmes. A higher

level of errors and

exceptions is therefore

part of the operations

and has to be accepted.

- EIT staff capacity

remains limited due to

the structural

understaffing of the EIT,

which is recognised by

its Governing Board, the

Commission and the

Court of Auditors.

However, requests for

the EIT to significantly

increase its staff

capacity beyond the

foreseen posts allocated

in the current financial

perspective have been

declined. This means

that the level of control

and checks, and

subsequent assurance

that can be reached

may be lower than that

of other EU

programmes and

Agencies, which have

more adequate staffing

compared to the

budgetary amounts and

operational complexity

of programmes

managed.

and consequently lower error

rates.

The European Commission

will be asked to address the

structural understaffing of

the EIT and provide for more

resources in the

establishment plan. Without

adequate resources, the EIT

may not be in a position to

deliver fully on some

operational activities, as it

will have to focus ever more

resources on grant assurance

considering that the EIT faces

an increasing budget and

number of KICs to manage.

The EIT will take a series of

measures to further increase

its capacity outside of the

establishment plan, for

example through an

increased use of interimaire

staff, trainees and external

experts.

71

PART IV

MANAGEMENT ASSURANCE

4.1 Review of the elements supporting assurance

The information reported in Parts II and III derives from the results of the management supervision of activities and

audit observations contained in the audit reports listed. These reports are based on a systematic analysis of the

evidence available. This approach provided sufficient guarantees as to the completeness and reliability of the

information reported and ensures a complete coverage of the EIT budget.

In conclusion, the management has reasonable assurance that, overall, suitable controls are in place and working as

intended; risks are being appropriately monitored and mitigated; and necessary improvements and reinforcements

are being implemented. The Interim Director of the EIT, in his capacity as Authorising Officer has signed the

Declaration of Assurance.

Nevertheless, as indicated in section 3.2 above, there is an inherently higher risk level of the EIT that can only be

addressed through the full implementation of mitigation measures. As some of these measures are under the control

of other institutions than the EIT, the EIT Interim Director cannot reduce these risks to an acceptable level and fully

ensure that the EIT reaches its objectives without the indicated measures being implemented by these institutions.

Furthermore, as reported in section 2.6.3 above, the preliminary observations of the European Court of Auditors may

have an impact on the final error rate reported by the Court for year 2016 but are subject to a legal analysis and a

contradictory procedure at the time of writing this report.

4.2 Overall conclusion on assurance

The information reported in Parts II and III does not result in any major issues meriting a reservation. The main

remaining weaknesses were identified in the previous chapter.

72

DECLARATION OF ASSURANCE I, the undersigned,

Interim Director of the European Institute of Innovation and Technology

In my capacity as authorising officer

Declare that the information contained in this report gives a true and fair view.

State that I have reasonable assurance that the resources assigned to the activities described in this report have been

used for their intended purpose and in accordance with the principles of sound financial management, and that the

control procedures put in place give the necessary guarantees concerning the legality and regularity of the underlying

transactions.

This reasonable assurance is based on my own judgement and on the information at my disposal, such as the results

of the ex-ante assessment, ex-post controls, the work of the internal audit capability, the observations of the Internal

Audit Service and the lessons learnt from the reports of the Court of Auditors for years prior to the year of this

declaration.

Confirm that I am not aware of anything not reported here which could harm the interests of the institution.

Budapest, ……………… 2017

Martin Kern

signed

27.06.

73

ANNEXES

74

Annex I: Validated EIT core KPIs (Grant

Agreements 2015)

EIT core KPI EIT Digital Climate-KIC EIT InnoEnergy

1 Attractiveness of the

education programs: EIT

Labelled

Ratio: 4.08


400 seats

Ratio: 3.89


141 seats

Ratio: 6.09


259 seats

2 Number of graduates: EIT

labelled degrees 146 117 132

3 Business ideas incubated 174 276 91

4 Start-ups/Spin-offs created 3 start-ups and

5 spin-offs

37 start-ups and

1 spin-offs

23 start-ups and

0 spin-offs

5 Knowledge Transfer and

Adoption 57 transfer and

136 adoption

57 transfer and

25 adoption

5 transfer and

48 adoption

6 New or Improved

Products/Services/Processes 18 new and

6 improved

38 new and

14 improved

14 new and

2 improved

75

Annex II: Statistics on financial

management Breakdown and changes in commitment and payment appropriations per chapter:

76

Appropriations

adopted, EUR

Modifications

(transfers and

AB), EUR

Re-entered, EURAssigned

revenue, EURTotal, EUR

11Staff in active

employment3,843,060.00 -428,000.00 3,415,060.00

12 Recruitment expenses 45,000.00 0.00 45,000.00

13 Mission 250,000.00 -52,000.00 198,000.00

14Socio-medical

infrastructure102,800.00 -16,000.00 86,800.00

15 Training 90,000.00 -20,000.00 70,000.00

16External staff and

linguistic support777,302.00 -273,500.00 503,802.00

17 Representation 4,000.00 -2,000.00 2,000.00

5,112,162.00 -791,500.00 0.00 0.00 4,320,662.00

20Building and associated

costs128,000.00 -79,065.00 48,935.00

21

Information and

communication

technology

465,000.00 -67,450.00 397,550.00

22Moveable property and

associated costs62,750.00 -36,050.00 26,700.00

23Current administrative

expenditure356,750.00 -69,850.00 286,900.00

24Publications, information,

studies and surveys44,000.00 -29,000.00 15,000.00

25 Meeting expenses 431,780.00 -113,000.00 318,780.00

1,488,280.00 -394,415.00 0.00 0.00 1,093,865.00

30 Grants 253,634,936.00 532,248.70 21,101,824.84 695,066.58 275,964,076.12

31Knowledge and

Innovation Communities1,375,000.00 433,010.00 1,808,010.00

32 EIT's impact 1,660,000.00 -498,560.00 1,161,440.00

33Simplification, monitoring

and evaluation397,000.00 38,600.00 435,600.00

257,066,936.00 505,298.70 21,101,824.84 695,066.58 279,369,126.12

263,667,378.00 -680,616.30 21,101,824.84 695,066.58 284,783,653.12

40Cancelled appropriations

not used in year n0.00 9,012,879.42 9,012,879.42

0.00 9,012,879.42 0.00 0.00 9,012,879.42

263,667,378.00 8,332,263.12 21,101,824.84 695,066.58 293,796,532.54

Title 4 - Total

GRAND TOTAL

COMMITMENT APPROPRIATIONS

Chapter

Title 1 - Total

Title 2 - Total

Title 3 - Total

TOTAL

77

Appropriations

adopted, EUR

Modifications

(transfers and

AB), EUR



11Staff in active

employment3,843,060.00 -428,000.00 3,415,060.00


13 Mission 250,000.00 -52,000.00 198,000.00

14Socio-medical

infrastructure102,800.00 -16,000.00 86,800.00

15 Training 90,000.00 -20,000.00 70,000.00



17 Representation 4,000.00 -2,000.00 2,000.00

5,112,162.00 -791,500.00 0.00 0.00 4,320,662.00


costs128,000.00 -79,065.00 48,935.00

21

Information and

communication

technology

465,000.00 -67,450.00 397,550.00




expenditure356,750.00 -69,850.00 286,900.00




1,488,280.00 -394,415.00 0.00 0.00 1,093,865.00

30 Grants 271,019,742.92 -16,090,203.26 2,545,368.92 695,066.58 258,169,975.16

31Knowledge and

Innovation Communities999,000.00 421,500.00 1,420,500.00

32 EIT's impact 1,092,500.00 513,000.00 1,605,500.00


and evaluation587,000.00 -398,400.00 188,600.00

273,698,242.92 -15,554,103.26 2,545,368.92 695,066.58 261,384,575.16

280,298,684.92 -16,740,018.26 2,545,368.92 695,066.58 266,799,102.16


not used in year n0.00 4,520,339.39 4,520,339.39

0.00 4,520,339.39 0.00 0.00 4,520,339.39

280,298,684.92 -12,219,678.87 2,545,368.92 695,066.58 271,319,441.55

Title 4 - Total

GRAND TOTAL

PAYMENT APPROPRIATIONS

Chapter

Title 1 - Total

Title 2 - Total

Title 3 - Total

TOTAL

78

EIT revenue collected, EUR

Comparison of budget execution for commitments, EUR

Comparison of budget execution for payments, EUR

Comparison of committed and RAL amounts for financial years 2013, 2014 and 2015, EUR

263,554,082.96 227,017,581.00 164,850,050.00 16.1%

0.00 1,560,000.00 1,560,000.00 -100.0%

4,583.70 7,547.64 31,614.04 -39.3%

7,065,708.31 1,564,522.98 351.6%

431,827.42 263,239.16 712,431.44 64.0%

TOTAL 271,056,202.39 230,412,890.78 167,154,095.48 17.6%

Surplus, balances

Repayment of KICs grants incurred as a

result of an ex-post audit

2015Var. 2016/2015,

%

European Union subsidy, EFTA and third

party contribution

Contribution by the Host Member State

Other revenue from administrative

operations

Income line header 2016 2014

Budget Title 2016 2015 2014

1 Staff expenditure 4,164,316.62 3,776,915.96 3,760,695.52

2 Infrastructure and

operating expenditure973,458.87 807,497.27 1,051,002.24

3 Operational expenditure 244,774,789.20 238,536,397.71 216,765,223.48

TOTAL 249,912,564.69 243,120,810.94 221,576,921.24

Budget Title 2016 2015 2014

1 Staff expenditure 3,968,571.84 3,634,394.83 3,337,077.26

2 Infrastructure and

operating expenditure580,353.18 453,778.62 594,512.95

3 Operational expenditure 256,803,096.75 218,206,460.23 159,927,251.04

TOTAL 261,352,021.77 222,294,633.68 163,858,841.25

80

Annex III: Organisational chart in 2016

Director

Quality Assurance and

Control

Legal Assurance

Accounting Officer

Internal Auditor

Services and Finance

Partnerships Management

Policy and

Communications

Human Resources

Budget and Finance

Legal and Procurement

First wave KICs

Monitoring and New KIC

management

Grant Assurance and

FinancePolicy Support and

Stakeholder Relations

Strategy and Impsct

Communications and

Dissemination

Infrastructure and IT

COO

81

Annex IV: Establishment Plan and

additional information on Human

Resources management Establishment Plan:

Category

and grade

Establishment plan 2016 Actually filled as of 31

December 2016

Officials

(n/a)

Temporary

staff (TA)

Temporary staff (TA)

AD 16

AD 15

AD 14 1

AD 13

AD 12

AD 11 1 1

AD 10

AD 9 7 5

AD 8 6 5

AD 7 9 8

AD 6 10 13

AD 5

Total AD 34 32

AST 11

AST 10

AST 9

AST 8

AST 7

AST 6

AST 5 1 1

AST 4 3 2

AST 3 1 1

AST 2

AST 1

Total AST 5 4

AST/SC 6

AST/SC5

AST/SC4

AST/SC3

AST/SC2

AST/SC1

Total ST/SC 0 0

TOTAL 39 36

82

External personnel:

Category Authorised

2016

Actually filled as

of 31 December

2016

Contract staff (CA)

FG IV 8 3

FG III 8 13

FG II 6 5

FG I

TOTAL 22 21

Seconded national Experts (SNE)

TOTAL 2 2

a) Information on the entry level for each type of post

Key functions Type of Contract

(TA, CA)

Function group, grade of

recruitment

Indication whether the function

is dedicated to administrative

support or operations

CORE FUNCTIONS

Director (level 1) TA AD 14 Management (both administration

and operational)

Chief Operating Officer (level 2) TA AD 11 Management (both administration

and operational)

Head of Unit TA AD9 Management (both administration

and operational)

Senior Officer TA AD8 operational

Officer (Programme) TA/CA AD6/FGIV operational

SUPPORT FUNCTIONS

Head of Unit Services and Finance TA AD9 administration

Head of Section Human Resources TA AD6 administration

Head of Section Budget and Finance TA AD6 administration

Head of Section Legal and Procurement TA AD6 administration and operational

Corporate Communications Officer TA AD5 administration and operational

Head of Section IT and Infrastructure TA AD 9 administration

Officer (Policy) TA AD6 administration

Secretary CA FG II administration and operational

SPECIAL FUNCTIONS

83

Data Protection Officer (Legal Advisor

appointed, not a separate function)

TA AD6 administration

Corporate Legal Officer TA AD8 administration

Accounting Officer TA AD8 administration

Internal Auditor TA AD7 Administration

b) Result of the job screening exercise (31/12/2016)

Job Type and Category Year 2015 Year 2016

ADMINISTRATIVE SUPPORT AND COORDINATION 32% 30%

Administrative Support 11 11

Coordination 8 8

OPERATIONAL 57% 59%

Top-Level Operational Coordination 4 4

Programme Management & Implementation 18 19

Evaluation & Impact Assessment 6 7

General Operational 6 7

NEUTRAL 11% 11%

Finance 6 6

Control 1 1

84

Annex V: Human and Financial resources

by activity

1 The operational Human Resources consist of the total number of Temporary and Contract Agents directly involved in operations.

2 The operational expenditure is the costs directly involved in the implementation of the projects of the AWP.

3 The overheads are costs indirectly involved in the implementation of the projects of the AWP. These include fixed costs such as salaries, rent,

software licences and other similar costs. In addition, overheads include variable costs such as office equipment and supplies, ICT equipment,

telecommunication costs and other similar expenses. The total overheads are distributed to each area of activity in proportion to the operational

staff employed in each area of activity.

Activity TA CA SNE Operational

HR1

Operational exp.,

EUR2 Overheads, EUR3

Total cost

(operational exp. and

overheads), EUR

Consolidating,

fostering growth and

impact of the KICs

10,5 5 0 15,5 243 361 612,15 1 349 754,58 244 711 366,73

Start up and new KICs 3 0 0 3 98 273,05 261 242,82 359 515,87

Simplification 0,5 0 0 0,5 0,00 43 540,47 43 540,47

Monitoring, impact

analysis and

evaluation

3 2 1 6 303 853,90 522 485,64 826 339,54

Fostering knowledge

exchange trough

dissemination and

outreach

3 1 0 4 782 618,34 348 323,76 1 130 942,10

Fostering and

attracting talent 1 0 0 1 101 939,48 87 080,94 189 020,42

Enhancing stakeholder

engagement 2 1 1 4 126 492,28 348 323,76 474 816,04

Strategy: Coordination

and implementation 4 1 0 5 0,00 435 404,70 435 404,70

Administrative support 9 11 0 20 0,00 1 741 618,81 1 741 618,81

TOTAL 36 21 2 59 244 774 789,20 5 137 775,49 249 912 564,69

85

Annex VI: Specific annexes related to part

II a) Budget implementation

Revenue

Expenditure

200 European Union subsidy 252,158,953.03 252,158,953.03 252,158,953.03 0.00

300Contributions by the EFTA

member states6,875,046.93 6,875,046.93 6,875,046.93 0.00

310 Contributions by third countries 4,520,083.00 4,520,083.00 4,520,083.00 0.00

570Revenue arising from repayment

of amounts wrongly paid4,583.70 4,583.70 4,583.70 0.00

590Other revenue from administrative

operations0.00 329.57 0.00 329.57

600 Surplus, balances 7,065,708.31 0.00

701

Repayment of KICs grants incurred

as a result of an ex-post audit

(assigned revenue)

695,066.58 263,239.16 431,827.42 263,239.16 431,827.42 0.00

TOTAL 271,319,441.55 267,822.86 263,986,239.95 263,239.16 263,990,494.08 329.57

Outstanding

amounts, EUR

(1+2-3-4)

Income

appropriation,

EUR

Entitlements

established in

2016, EUR (2)

Revenue

received, EUR

(4)

Entitlements

established in

2015, EUR (1)

Revenue carried

over from 2015,

EUR (3)

Income

lineIncome line header

86

Implementation of the commitment and payment appropriations per budget item (C1)

Budget line Budget Item Description

Commitment

appropriations, EUR

(1)

Commitments

made, EUR (2)

%

Committe

d

(2/1)

Payment

appropriations, EUR

(3)

Payments made,

EUR (4)

% Paid

(4/3)

R A L

(2-4)

A-1100 Basic salaries including weightings 1,659,038.00 1,642,937.24 99.03% 1,659,038.00 1,642,937.24 99.03% -

A-1101 Allowances 587,425.00 582,045.70 99.08% 587,425.00 582,045.70 99.08% -

A-1102 Employers charges 130,597.00 127,165.19 97.37% 130,597.00 127,165.19 97.37% -

A-1110Remuneration and allowances of

contract agents728,000.00 722,723.18 99.28% 728,000.00 722,723.18 99.28% -

A-1120 Termination of service 20,000.00 - 0.00% 20,000.00 - 0.00% -

A-1121Entitlements related to entering the

service100,000.00 81,661.87 81.66% 100,000.00 81,661.87 81.66% -

A-1130 Schooling 190,000.00 188,671.75 99.30% 190,000.00 188,661.94 99.30% 9.81

Total 3,415,060.00 3,345,204.93 97.95% 3,415,060.00 3,345,195.12 97.95% 9.81

A-1200 Recruitment expenses 45,000.00 37,960.50 84.36% 45,000.00 37,960.50 84.36% -

Total 45,000.00 37,960.50 84.36% 45,000.00 37,960.50 84.36% -

A-1300 Mission expenses 198,000.00 198,000.00 100.00% 198,000.00 177,216.87 89.50% 20,783.13

Total 198,000.00 198,000.00 100.00% 198,000.00 177,216.87 89.50% 20,783.13

A-1400 Restaurants and canteens 500.00 418.48 83.70% 500.00 418.48 83.70% -

A-1410 Medical expenses 5,000.00 2,564.72 51.29% 5,000.00 2,564.72 51.29% -

A-1420Early childhood centre and

approved day nurseries75,000.00 75,000.00 100.00% 75,000.00 69,027.72 92.04% 5,972.28

A-1430Social contacts among staff

members6,300.00 5,266.06 83.59% 6,300.00 2,537.06 40.27% 2,729.00

Total 86,800.00 83,249.26 95.91% 86,800.00 74,547.98 85.88% 8,701.28

A-1500 Training 70,000.00 31,033.39 44.33% 70,000.00 10,517.99 15.03% 20,515.40

Total 70,000.00 31,033.39 44.33% 70,000.00 10,517.99 15.03% 20,515.40

A-1600 Agency staff 81,802.00 73,854.54 90.28% 81,802.00 5,960.08 7.29% 67,894.46

A-1601 Seconded National Expert 55,000.00 51,697.98 94.00% 55,000.00 51,697.98 94.00% -

A-1602 Trainees 39,000.00 33,564.12 86.06% 39,000.00 33,564.12 86.06% -

A-1603 IT support 171,000.00 160,269.00 93.72% 171,000.00 99,900.00 58.42% 60,369.00

A-1604 Administrative assistance 70,000.00 64,520.00 92.17% 70,000.00 47,048.30 67.21% 17,471.70

A-1611 Translation 87,000.00 84,585.65 97.22% 87,000.00 84,585.65 97.22% -

Total 503,802.00 468,491.29 92.99% 503,802.00 322,756.13 64.06% 145,735.16

A-1700 Representation expenses 2,000.00 377.25 18.86% 2,000.00 377.25 18.86% -

Total 2,000.00 377.25 18.86% 2,000.00 377.25 18.86% -

TOTAL - Title 1 4,320,662.00 4,164,316.62 96.38% 4,320,662.00 3,968,571.84 91.85% 195,744.78

87


Commitment

appropriations, EUR

(1)

Commitments

made, EUR (2)

%

Committe

d

(2/1)

Payment

appropriations, EUR

(3)

Payments made,

EUR (4)

% Paid

(4/3)

R A L

(2-4)

A-2000 Renting 6,000.00 6,000.00 100.00% 6,000.00 5,700.00 95.00% 300.00

A-2003 Water gas electricity and heating 20,000.00 20,000.00 100.00% 20,000.00 0.00% 20,000.00

A-2004 Cleaning and maintenance 16,400.00 13,833.34 84.35% 16,400.00 8,113.34 49.47% 5,720.00

A-2005 Security and surveillance 4,535.00 4,376.18 96.50% 4,535.00 806.18 17.78% 3,570.00

A-2006 Fitting out of premises 2,000.00 709.97 35.50% 2,000.00 709.97 35.50% -

Total 48,935.00 44,919.49 91.79% 48,935.00 15,329.49 31.33% 29,590.00

A-2100Acquisition renting of equipments

and software221,500.00 218,572.35 98.68% 221,500.00 115,497.45 52.14% 103,074.90

A-2101Maintenance and repair of

equipments176,050.00 175,671.62 99.79% 176,050.00 116,937.62 66.42% 58,734.00

Total 397,550.00 394,243.97 99.17% 397,550.00 232,435.07 58.47% 161,808.90

A-2200Acquisition general, technical

equipment3,700.00 3,568.90 96.46% 3,700.00 472.90 12.78% 3,096.00

A-2212 Transport cost 1,000.00 4.50 0.45% 1,000.00 4.50 0.45% -

A-2220 Acquisition of furniture 22,000.00 21,878.08 99.45% 22,000.00 21,878.08 99.45% -

Total 26,700.00 25,451.48 95.32% 26,700.00 22,355.48 83.73% 3,096.00

A-2300 Stationery and office supplies 9,900.00 9,887.77 99.88% 9,900.00 239.87 2.42% 9,647.90

A-2301 Postage and delivery charges 2,500.00 2,500.00 100.00% 2,500.00 2,376.05 95.04% 123.95

A-2302 Telecommunication charges 41,000.00 41,000.00 100.00% 41,000.00 22,847.67 55.73% 18,152.33

A-2303 Legal expenses and damages 25,000.00 24,020.00 96.08% 25,000.00 17,772.13 71.09% 6,247.87

A-2305 Bank charges 3,000.00 2,000.00 66.67% 3,000.00 924.17 30.81% 1,075.83

A-2306Honoraria for Governing Board

Members200,500.00 161,500.00 80.55% 200,500.00 157,500.00 78.55% 4,000.00

A-2309 Other administrative expenses 5,000.00 930.80 18.62% 5,000.00 930.80 18.62% -

Total 286,900.00 241,838.57 84.29% 286,900.00 202,590.69 70.61% 39,247.88

A-2400 Official Journal 2,000.00 908.40 45.42% 2,000.00 388.40 19.42% 520.00

A-2401 EIT publications 3,000.00 257.63 8.59% 3,000.00 257.63 8.59% -

A-2403 Studies and surveys 10,000.00 8,905.00 89.05% 10,000.00 0.00% 8,905.00

Total 15,000.00 10,071.03 67.14% 15,000.00 646.03 4.31% 9,425.00

A-2500Organisation and travel expenses of

Governing Board meetings310,780.00 254,147.04 81.78% 310,780.00 104,209.13 33.53% 149,937.91

A-2520 Internal meetings 8,000.00 2,787.29 34.84% 8,000.00 2,787.29 34.84% -

Total 318,780.00 256,934.33 80.60% 318,780.00 106,996.42 33.56% 149,937.91

TOTAL - Title 2 1,093,865.00 973,458.87 88.99% 1,093,865.00 580,353.18 53.06% 393,105.69

5,414,527.00 5,137,775.49 94.89% 5,414,527.00 4,548,925.02 84.01% 588,850.47 TOTAL - Title 1 and Title 2

88

Implementation of the commitment appropriations (C3) and payment appropriations per budget item (C2)



Commitment

appropriations, EUR

(1)

Commitments

made, EUR (2)

%

Committe

d

(2/1)

Payment

appropriations, EUR

(3)

Payments made,

EUR (4)

% Paid

(4/3)

R A L

(2-4)

B3-000 KIC Grants 254,167,184.70 241,878,980.43 95.17% 254,929,539.66 254,145,577.62 99.69%

Total 254,167,184.70 241,878,980.43 95.17% 254,929,539.66 254,145,577.62 99.69%

B3-111 Planning, reporting and audits 1,537,010.00 1,482,631.68 96.46% 1,013,000.00 867,559.48 85.64%

B3-112 Knowledge Triangle Integration 71,000.00 70,188.28 98.86% 71,000.00 48,939.29 68.93%

B3-114 New KICs 200,000.00 98,273.05 49.14% 336,500.00 226,080.07 67.19%

Total 1,808,010.00 1,651,093.01 91.32% 1,420,500.00 1,142,578.84 80.43%

B3-202Communications and

Dissemination811,000.00 782,618.34 96.50% 803,500.00 757,938.15 94.33%

B3-203 Alumni 250,000.00 101,939.48 40.78% 150,000.00 99,689.83 66.46%

B3-204 Stakeholder relations 85,440.00 3,315.00 3.88% 591,000.00 475,037.03 80.38%

B3-205 Awards 15,000.00 15,000.00 100.00% 61,000.00 59,889.69 98.18%

Total 1,161,440.00 902,872.82 77.74% 1,605,500.00 1,392,554.70 86.74%

B3-301 EIT-KIC relations 100,000.00 37,989.00 37.99% 89,600.00 51,923.65 57.95%

B3-303 Monitoring and evaluation 335,600.00 303,853.94 90.54% 99,000.00 70,461.94 71.17%

Total 435,600.00 341,842.94 78.48% 188,600.00 122,385.59 64.89%

Total - Title 3 257,572,234.70 244,774,789.20 95.03% 258,144,139.66 256,803,096.75 99.48%

TOTAL 262,986,761.70 249,912,564.69 95.03% 263,558,666.66 261,352,021.77 99.16% 588,850.47

Budget


Commitment

appropriations,

EUR (1)

Commitments

made, EUR (2)

% Committed

(2/1)

Payment

appropriations,

EUR (3)

Payments made,

EUR (4) % Paid (4/3)

B3-000 KIC grants 21,101,824.84 21,101,824.84 100.00% 2,545,368.92 2,545,368.92 100.00%

Total 21,101,824.84 21,101,824.84 100.00% 2,545,368.92 2,545,368.92 100.00%


not used in year n9,012,879.42 - 0.00% 4,520,339.39 0.00%

Total 9,012,879.42 - 0.00% 4,520,339.39 - 0.00%

GRAND TOTAL 30,114,704.26 21,101,824.84 70.07% 7,065,708.31 2,545,368.92 36.02%

89



Budget

lineBudget Item Description

Commitment

appropriations, EUR

(1)

Commitments made,

EUR (2)

% Committed

(2/1)

Payment

appropriations,

EUR (3)

Payments made,

EUR (4) % Paid (4/3)

B3-000 KIC Grants 431,827.42 0,00 % 431,827.42 0,00 %

Total 431,827.42 - 0,00 % 431,827.42 - 0,00 %

Budget


Commitment

appropriations,

EUR (1)

Commitments

made, EUR (2)

% Committed

(2/1)

Payment

appropriations,

EUR (3)

Payments made,

EUR (4) % Paid (4/3)

B3-000 KIC Grants 263,239.16 263,239.16 100.00% 263,239.16 263,239.16 100.00%

Total 263,239.16 263,239.16 100.00% 263,239.16 263,239.16 100.00%

90

Budget


Commitment

appropriations,

EUR (1)

Commitments

made, EUR (2)

% Committed

(2/1)

Payment

appropriations,

EUR (3)

Payments made,

EUR (4)

% Paid

(4/3)

R A L

(2-4)

A-1300 Mission expenses 9,128.55 9,128.55 100.00% 9,128.55 9,128.55 100.00% -

Total 9,128.55 9,128.55 100.00% 9,128.55 9,128.55 100.00% -

A-1401 Medical expenses 564.32 564.32 100.00% 564.32 564.32 100.00% -

A-1402 Childhood centre 11,008.34 11,008.34 100.00% 11,008.34 11,008.34 100.00% -

A-1403 Social contacts 394.26 394.26 100.00% 394.26 394.26 100.00% -

Total 11,966.92 11,966.92 100.00% 11,966.92 11,966.92 100.00% -

A-1500 Training 33,117.81 15,227.44 45.98% 33,117.81 15,227.44 45.98% -

Total 33,117.81 15,227.44 45.98% 33,117.81 15,227.44 45.98% -

A-1603 IT support 14,604.00 14,285.00 97.82% 14,604.00 14,285.00 97.82% -

A-1604 Administrative assistance 59,263.00 59,082.37 99.70% 59,263.00 59,082.37 99.70% -

A-1611 Translation 14,440.85 14,126.60 97.82% 14,440.85 14,126.60 97.82% -

Total 88,307.85 87,493.97 99.08% 88,307.85 87,493.97 99.08% -

TOTAL - Title 1 142,521.13 123,816.88 86.88% 142,521.13 123,816.88 86.88% -

A-2020Water gas electricity and

heating20,000.00 18,520.83 92.60% 20,000.00 18,520.83 92.60% -

A-2030 Cleaning and maintenance 6,061.60 5,520.00 91.07% 6,061.60 5,520.00 91.07% -

A-2040 Security and surveillance 500.00 180.00 36.00% 500.00 180.00 36.00% -

A-2006 Fitting out of premises 2,260.40 2,036.34 90.09% 2,260.40 2,036.34 90.09% -

Total 28,822.00 26,257.17 91.10% 28,822.00 26,257.17 91.10% -

A-2100Acquisition renting of

equipments and software206,423.95 197,092.39 95.48% 206,423.95 197,092.39 95.48% -


equipments28,817.23 28,817.23 100.00% 28,817.23 28,817.23 100.00% -

Total 235,241.18 225,909.62 96.03% 235,241.18 225,909.62 96.03% -

A-2300 Stationery 591.58 205.00 34.65% 591.58 205.00 34.65% -

A-2301 Postage and delivery charges 465.21 212.31 45.64% 465.21 212.31 45.64% -

A-2302 Telecommunication charges 13,985.48 9,464.50 67.67% 13,985.48 9,464.50 67.67% -

A-2303 Legal expenses and damages 15,180.00 9,900.00 65.22% 15,180.00 9,900.00 65.22% -

A-2305 Bank charges 294.87 294.87 100.00% 294.87 294.87 100.00% -

A-2309 Other administrative expense 281.13 33.57 11.94% 281.13 33.57 11.94% -

Total 30,798.27 20,110.25 65.30% 30,798.27 20,110.25 65.30% -

A-2400 Official Journal 500.00 499.18 99.84% 500.00 499.18 99.84% -

Total 500.00 499.18 99.84% 500.00 499.18 99.84% -

A-2500

Organisation and travel

expense of Governing Board

meetings

58,357.20 45,423.52 77.84% 58,357.20 45,423.52 77.84% -

Total 58,357.20 45,423.52 77.84% 58,357.20 45,423.52 77.84% -

Total - Title 2 353,718.65 318,199.74 89.96% 353,718.65 318,199.74 89.96% -

496,239.78 442,016.62 89.07% 496,239.78 442,016.62 89.07% - TOTAL - Title 1 and Title 2

91

b) List of contracts, external experts and grants awarded in 2016

List of procurement contracts and exceptional negotiated procedures

The below list includes the compulsory information for publication purposes on:

1) Contracts (direct contracts, framework contracts, purchase orders) awarded by the EIT for a value between

EUR 15 000 and EUR 60 000 (see Article 123 (4) of the Rules of Application to the Financial Regulation):

Number of

contract

Contract type Supplies/services Name of the

contractor

Value of the

contract

Currency

01/2016/NP/EIT

PROC

Framework

Contract

Acquisition of office

supplies and stationary to

the European Institute of

Innovation and Technology

Iroda

Magyarország

Kft.

53,000.00 EUR

02/2016/EITPR

OC

Framework

Contract

Provision of provision of

landline

telecommunication

services

Magyar

Telekom Plc.

57,000.00 EUR

03/2016/EITPR

OC

Framework

Contract

Provision of mobile

telephony services

Magyar

Telekom Plc.

59,200.00 EUR

04/2016/NP/EIT

PROC

Direct

Service

Contract

Provision of legal advice

related to the

establishment of a Multi-

Compartment Investment

Fund

P+P PÖLLATH

+ PARTNERS

Rechtsanwälte

und

Steuerberater

mbB

37,125.00 EUR

2) Contracts (direct contracts, framework contracts, purchase orders) awarded by the EIT for a value between

EUR 60 000 and more (see Article 123 (4) of the Rules of Application to the Financial Regulation):

Number of

contract


contractor

Value of the

contract

Currency

07/2015/OC/EIT

PROC

Framework

Contract

Provision of interim staff

services

Starjobs

Hungary Ltd.

360,000.00 EUR

16/2016/NP/EIT

PROC

Direct

Service

Contract

Provision of Services

concerning a Study and an

Analysis on the Global and

European Impact of the EIT

Pricewaterhou

seCoopers EU

Services EESV

133,060.00 EUR

92

and its KICs from 2010 to

2016

3) Aggregate amount of specific contracts and order forms based on framework contracts exceeding

EUR 135 000, if their volume is above EUR 15 000 (see Article 124 (4) of the Rules of Application to the Financial

Regulation):

Number of

contract


contractor

Value of the

contract

Currenc

y

EAC/23/2011/

Lot1EAC/23/2

011/Lot1

Specific Contract

under FWC

Amendment no 1 to SC

835/2015/EIT (revised price)

ECORYS UK

LIMITED

731,329.75 EUR

EAC/23/2011/

Lot2

Specific Contract

under FWC

Organisation of the Exco-GB

meeting March 2016

Team Work SAS 38,368.49 EUR

EAC/23/2011/

Lot2

Specific Contract

under FWC

Organisation of the 40th GB

and ExCo meeting` on 01-02

June 2016


EAC/23/2011/

Lot2

Specific Contract

under FWC

Organisation of EIT Alumni

Community Board mtgs 2016-

2017


EAC/23/2011/

Lot2

Specific Contract

under FWC

Organisation of 41th GB and

ExCo meeting_21-22 Sept

2016


EAC/23/2011/

Lot2

Specific Contract

under FWC

Organisation of 42nd GB

meeting on 16-17th

November


EAC/23/2011/

Lot2

Specific Contract

under FWC

Organisation of 43-44 GB and

ExCo meeting in Dec 6-8 2016


EAC/23/2011/

Lot2

Specific Contract

under FWC

Organisation of GB and ExCo

meeting in Mar 22-23 2017


93

BUDG 15 PO

03 / 30-CE-

0756483

Specific Contract

under FWC

Issuing certificates on

financial statements batch 3

Ernst&Young

Bedrijfsrevisoren

BCVBA

191,999.50 EUR

BUDG 15 PO

03 / 30-CE-

0756483

Specific Contract

under FWC


financial statements batch 4

Ernst&Young

Bedrijfsrevisoren

BCVBA

155,990.00 EUR

BUDG 15 PO

03 / 30-CE-

0756492

Specific Contract

under FWC


Financial Statement batch 1

Moore Stephens

LLP

161,750.00 EUR

BUDG 15 PO

03 / 30-CE-

0756492

Specific Contract

under FWC

Issuing certificates of

accounts on financial

statements batch 2

Moore Stephens

LLP

208,015.00 EUR

BUDG 15 PO

03 / 30-CE-

0756492

Specific Contract

under FWC

Ex-post control of 2015 Grant

Agreements

Moore Stephens

LLP

147,697.50 EUR

BUDG 15 PO

03 / 30-CE-

0756444/00-

28

Specific Contract

under FWC

Certification of annual

accounts

Mazars SA 24,200.00 EUR

38/2013/OP/E

ITPROC

Specific Contract

under FWC

SC NO.15_IT 2nd level

support

Grape Solutions

Zrt

82,477.00 EUR

38/2013/OP/E

ITPROC

Specific Contract

under FWC

SC NO.17_Provision of KM

consultant

Grape Solutions

Zrt

49,010.00 EUR

38/2013/OP/E

ITPROC

Specific Contract

under FWC

SC NO.18_Provision of KM

consultant

Grape Solutions

Zrt

40,898.00 EUR

38/2013/OP/E

ITPROC

Specific Contract

under FWC

SC NO.19_IT 1st level support Grape Solutions

Zrt

43,896.00 EUR

3) List of exceptional negotiated procedures in 2016:

N/A

94

List of experts

In accordance with Article 40(5) of the Horizon 2020 Rules for Participation and Article 287(5) of the rules of

Application of the Financial Regulation, the below listed experts have been contracted in 2016:

Name of expert Area Amount

(EUR)

Angelo Bianchi ASSESMENT AND FURTHER DEVELOPMENT OF PROCUREMENT PROCEDURES OF

KIC INNOENERGY

4,984.00

Laszlo Velikovszki ASSESMENT AND FURTHER DEVELOPMENT OF PROCUREMENT PROCEDURES OF

KIC INNOENERGY

4,984.00

Richard Tunstall EVALUATION OF THE KIC'S SELF-ASSESSMENTS FOR THE AWARD OF THE EIT

LABEL FOR NEW MASTER AND DOCTOR PROGRAMMES

20,578.00

Klaus Holmsberg EVALUATOR, EIT KICS GA 2015 REPORTING ASSESSMENT AND KICS 2017 BP

EVALUATION

18,709.00

Mihai Marius Voronca EVALUATOR, EIT KICS GA 2015 REPORTING ASSESSMENT AND KICS 2017 BP

EVALUATION

8,806.50

Christopher Sear RAPPORTEUR, EIT KICS GA 2015 REPORTING ASSESSMENT AND KICS 2017 BP

EVALUATION

11,284.00

Munoz Lescano EVALUATOR, EIT KICS GA 2015 REPORTING ASSESSMENT AND KICS 2017 BP

EVALUATION

8,806.50

Kiki Aikaterini ASSESSMENT OF THE IMPLEMENTATION OF THE EIT KICS EDUCATIONAL

PROGRAMMES 2016

20,578.00

Nicola Ciulli RAPPORTEUR, EIT KICS GA 2015 REPORTING ASSESSMENT AND KICS 2017 BP

EVALUATION

11,940.31

Volodymyr Shatokha EVALUATOR, EIT KICS GA 2015 REPORTING ASSESSMENT AND KICS 2017 BP

EVALUATION

18,934.00

Oriol Alcoba Malaspina EIT KICS GA 2015 REPORTING ASSESSMENT AND KICS 2017 BP EVALUATION 18,934.00

Philippe Vanrie EVALUATOR, EIT KICS GA 2015 REPORTING ASSESSMENT AND KICS 2017 BP

EVALUATION

18,934.00

Jan Miller ASSESSMENT OF THE EIT'S EDUCATIONAL AGENDA 20,578.00

Hans Karlsen EIT KICS GA 2015 REPORTING ASSESSMENT AND KICS 2017 BP EVALUATION 8,806.50

95

Andreas Engel EIT KICS GA 2015 REPORTING ASSESSMENT AND KICS 2017 BP EVALUATION 18,934.00

Edwin Janssen ASSESSMENT OF THE GRANT AGREEMENT 2015 REPORTING OF THE KICS AND

ASSESSMENT OF THE 2017 BUSINESS PLANS

42,800.30

Liana Maria Ranga EVALUATION OF THE KIC'S SELF-ASSESSMENTS FOR THE AWARD OF THE EIT


13,534.00

Richard Tunstall EVALUATION OF THE KIC'S SELF-ASSESSMENTS FOR THE AWARD OF THE EIT


13,620.28

A.P.C. Faij EXPERT, MONITORING 2016 3,042.00

Costis Kompis EVALUATOR, EIT KICS GA 2015 REPORTING ASSESSMENT AND KICS 2017 BP

EVALUATION

18,934.00

Marc Rosen VALUATOR, EIT KICS GA 2015 REPORTING ASSESSMENT AND KICS 2017 BP

EVALUATION

23,034.00

D. De Keukeleere EVALUATOR, EIT KICS GA 2015 REPORTING ASSESSMENT AND KICS 2017 BP

EVALUATION

18,934.00

Edwin Janssen RAPPORTEUR, EIT KICS GA 2015 REPORTING ASSESSMENT AND KICS 2017 BP

EVALUATION

11,884.30

Yves Boisselier EVALUATOR, EIT KICS GA 2015 REPORTING ASSESSMENT AND KICS 2017 BP

EVALUATION

18,934.00

Massimo Mecella EVALUATOR, EIT KICS GA 2015 REPORTING ASSESSMENT AND KICS 2017 BP

EVALUATION

18,934.00

Lorenzo Di Gregorio EVALUATOR, EIT KICS GA 2015 REPORTING ASSESSMENT AND KICS 2017 BP

EVALUATION

18,934.00

Margareth Gfrerer EVALUATOR, EIT KICS GA 2015 REPORTING ASSESSMENT AND KICS 2017 BP

EVALUATION

18,934.00

Corina Pascu RAPPORTEUR SUPPORTING THE EIT IN THE SELECTION OF THE NEW KICS IN 2016 15,302.00

Heikki Malinen EDU EXPERT SUPPORTING THE EIT IN THE SELECTION OF THE NEW KICS IN 2016 12,826.00

Thomas Ohlsson FOOD EXPERT SUPPORTING THE EIT IN THE SELECTION OF THE NEW KICS IN 2016 12,826.00

Rossitza Setchi VAM EXPERT SUPPORTING THE EIT IN THE SELECTION OF THE NEW KICS IN 2016 12,826.00

96

Guus Keder BC EXPERT SUPPORTING THE EIT IN THE SELECTION OF THE NEW KICS IN 2016 12,826.00

Rui Costa FOOD EXPERT SUPPORTING THE EIT IN THE SELECTION OF THE NEW KICS IN 2016 12,826.00

Iordanis Arzimanoglou RAPPORTEUR SUPPORTING THE EIT IN THE SELECTION OF THE NEW KICS IN 2016 15,302.00

Camilla Sorensen BUSINESS PLAN 2017 ASSESSMENT EXERCISE, EVALUATOR 10,834.00

Riika Irmeli Paasikivi BUSINESS PLAN 2017 ASSESSMENT EXERCISE, EVALUATOR 10,834.00

Olinto Vieira BC EXPERT SUPPORTING THE EIT IN THE SELECTION OF THE NEW KICS IN 2016 12,826.00

Standford Blade FOOD EXPERT SUPPORTING THE EIT IN THE SELECTION OF THE NEW KICS IN 2016 15,426.00

Raymond Winger FOOD EXPERT SUPPORTING THE EIT IN THE SELECTION OF THE NEW KICS IN 2016 12,826.00

Andy Bleaden BUSINESS PLAN 2017 ASSESSMENT EXERCISE, RAPPORTEUR 6,784.00

Mervin Levin BUSINESS PLAN 2017 ASSESSMENT EXERCISE, EVALUATOR 10,834.00

Frank Peck VAM EXPERT SUPPORTING THE EIT IN THE SELECTION OF THE NEW KICS IN 2016 12,826.00

David Tormey VAM EXPERT SUPPORTING THE EIT IN THE SELECTION OF THE NEW KICS IN 2016 12,826.00

Fredrick Boer EVALUATION OF THE KIC'S SELF-ASSESSMENTS FOR THE AWARD OF THE EIT


13,534.00

Chiotan Cristina BUSINESS PLAN 2017 ASSESSMENT EXERCISE, EVALUATOR 10,834.00

Casper Van Der Eijk BUSINESS PLAN 2017 ASSESSMENT EXERCISE, EVALUATOR 10,834.00

Jean-Mark Steiler BUSINESS PLAN 2017 ASSESSMENT EXERCISE, RAPORTEUR 6,784.00

Alexandros Chatzipetros BUSINESS PLAN 2017 ASSESSMENT EXERCISE, EVALUATOR 10,834.00

Jean-Luc Bessede BUSINESS PLAN 2017 ASSESSMENT EXERCISE, EVALUATOR 10,834.00

Mika Aalto BUSINESS PLAN 2017 ASSESSMENT EXERCISE, EVALUATOR 10,834.00

97

Peter Spark BUSINESS PLAN 2017 ASSESSMENT EXERCISE, EVALUATOR 10,834.00

Henning Alexander Kroll ASSESSMENT OF THE IMPLEMENTATION OF KNOWLEDGE TRIANGLE WITHIN THE

EIT & KICS

13,828.00

Sussane Durst ASSESSMENT OF THE IMPLEMENTATION OF KNOWLEDGE TRIANGLE WITHIN THE

EIT & KICS

18,054.00

Horvat Manfred ASSESSMENT OF THE IMPLEMENTATION OF KNOWLEDGE TRIANGLE WITHIN THE

EIT & KICS

17,604.00

Barend Van Den Meulen ASSESSMENT OF THE IMPLEMENTATION OF KNOWLEDGE TRIANGLE WITHIN THE

EIT & KICS

23,180.00

Javad Zarbakhsh VAM EXPERT SUPPORTING THE EIT IN THE SELECTION OF THE NEW KICS IN 2016 12,826.00

Jacob Edler ASSESSMENT OF THE IMPLEMENTATION OF KNOWLEDGE TRIANGLE

INTEGRATION WITHIN THE EIT AND ITS KICS

5,568.00

Elzbieta Uzunow BUSINESS PLAN 2017 ASSESSMENT EXERCISE, EVALUATOR 10,834.00

Sandra Herron-Marx BUSINESS PLAN 2017 ASSESSMENT EXERCISE, EVALUATOR 10,834.00

Lena Tsipouri ASSESSMENT OF THE IMPLEMENTATION OF KNOWLEDGE TRIANGLE


5,568.00

Stefan Kuhlmann ASSESSMENT OF THE IMPLEMENTATION OF KNOWLEDGE TRIANGLE


5,568.00

Laszlo Velikovszki REVIEW OF KICS COMPLIANCE WITH THE EU PROCUREMENT DIRECTIVES AND

REVISIONOF THEIR PROCUREMENT PROCEDURES

8,584.00

Karsen Wambach BUSINESS PLAN 2017 ASSESSMENT EXERCISE, EVALUATOR 10,834.00

Graciela Padoani EDU EXPERT SUPPORTING THE EIT IN THE SELECTION OF THE NEW KICS IN 2016 12,826.00

Peter Van Der Hijden ASSESSMENT OF THE IMPLEMENTATION OF THE EIT KICS' EDUCATIONAL

PROGRAMMES

21,478.00

Peter Lund IO EXPERT SUPPORTING THE EIT IN THE SELECTION OF THE NEW KICS IN 2016 9,452.00

Colette Andree BUSINESS PLAN 2017 ASSESSMENT EXERCISE, EVALUATOR 10,384.00

98

Grants awarded

Name of the beneficiary city Country/

territory

Co-financing

rate

Amount (EUR) Subject of grant

Knowledge and

Innovation Community

CLIMATE-KIC HOLDING BV

Utrecht

The Netherlands

89.97%

74,450,000.00

Support the

implementation

of KIC added

value activities

(GA 2016)

Knowledge and

Innovation Community EIT

DIGITAL

Gent

Belgium

77.54%

71,591,357.00

Support the

implementation

of KIC added

value activities

(GA 2016)

Knowledge and

Innovation Community

KIC InnoEnergy SE

Eindhoven

The Netherlands

89.31%

75,952,688.00

Support the

implementation

of KIC added

value activities

(GA 2016)

Knowledge and


Raw Materials

Berlin Germany 78.27% 20,543,064.06

Support the

implementation

of KIC added

value activities

(GA 2016)

Knowledge and


HEALTH

München Germany 79.05% 20,706,935.00

Support the

implementation

of KIC added

value activities

(GA 2016)

99

Annex VII: Specific annexes related to part

III a) Risk mitigating actions undertaken in 2016

Description of the risk Proposed mitigating actions Accomplished risk mitigation

actions

Budget cuts or legal changes beyond

the EIT's control

Causes: changes in political priorities

by the Council, EP or Commission

Consequences: insufficient budget

available for the EIT to implement its

objectives or adverse legal changes

jeopardising the operations

Continued stakeholder

management to influence

decisions potentially affecting the

EIT.

Continuous dialogue was

maintained with key political

decision makers (Council, EP,

Commission) to have timely

information about potential

changes in the legal basis or in the

multi-annual budget.

Non-implementation of core elements

of EIT Annual Work Programme 2016

due to insufficient human resources

or high turnover of staff

Causes: lack of resources

Consequences: reputational loss,

potential legal/financial implications

The current staff attempts to

ensure mutual back-up of all

strategically important tasks.

Recruitment in the HR plan for

2016 to ensure reserve lists are

available.

Use of interim staff and trainees.

The EIT has recruited 16 new staff

in 2016 thereby increasing the

staff size to 59 by end-2016.

Framework contract for interim

staff services was concluded.

Interimaires and trainees were

used to bridge temporary gaps in

HR capacity.

100

Improper implementation of EIT-KICs

agreements given the complexity of

the KIC concept

Causes: new Framework Partnership

Agreements, complex KIC

governance, activities and evolving

partnerships

Consequences: irregularities,

recovery of EIT funds; delays in

i ple enting KICs acti ities; negative reactions from EC, ECA,

OLAF, KICs; damage

reputation/credibility of the EIT

Improve the procedures (SOPs) on

KIC grant management.

Implement revised grant

assurance strategy and EIT anti-

fraud strategy.

Review of implementation of

good governance principles.

Internal detailed assessments of

Performance and Cost reports for

the GA 2015.

Assessment of certificates on the

Financial Statements that are

required by the EIT.

Risk based ex-post audits to be

performed on GA 2015.

Improved SOPs for grant

management procedures adopted.

Revised grant assurance strategy

approved and in place.

Implementation of good

governance principles by KICs

monitored in 2016.

Detailed assessment of cost and

performance reports by the EIT

performed, CFSs obtained.

Ex-post audits carried out.

Unexpected/unforeseen legal and

procedural aspects delaying successful

completion of the 2016 KIC call

Causes: unexpected formal or legal

obstacles may arise

Consequences: delay of call

preparation, launch and

implementation; damage to the EIT's

credibility

Lessons learnt and IAS audit

recommendations concerning

2014 KIC call have been

addressed.

Planning of the process assuming

two weeks contingency in case of

some unexpected legal and

procurement problems.

Adequate operational and legal

resources and external expertise

allocated to the KIC call, including

an independent observer.

All lessons learned and IAS

recommendations implemented in

the 2016 Call for KIC Proposals.

Prudent planning of the timeline

and process led to timely

completion of the evaluation of

proposals.

Adequate resources were available

throughout the evaluation process.

101

Insufficient interest from potential

bidders to participate in the 2016 KIC

call

Causes: too tough requirements

presented in the call, no

understanding of the KIC concept

among potential participants,

economic crisis in the EU - reduced

R&D expenditures/industrial

participation

Consequences: delay/cancellation of

the call - need to re-publish a call,

damage to the EIT's credibility

To prepare and carry out a

dissemination plan together with

the EIT Communications Team.

Preparation of dissemination

package (including guidance) well

in advance, use of multiplier

organisations.

Communication and dissemination

activities carried out according to

plans.

IT hardware or software failure

Causes: Hardware devices or

software failure

Consequences: Systems and services

could be stopped for different

periods of time

Off-site back-up system in co-

operation with CEPOL.

IT software security review.

External support for IT section.

Address recommendations of the

document management audit in

the area of IT.

Off-site back-up system set up.

IT security improved by acquisition

of new software.

External IT support (1st and 2nd

level) available throughout 2016.

Audit recommendations addressed

continuously.

Revise planning and organisation of

the administrative and operational

processes

Causes: inappropriate time

management, insufficient and

inefficient processes

Consequences: non-achievement of

objectives or delay in the

achievement, waste of time and

resources

Start the 2018-2020 budgetary

planning in September 2016,

monthly monitoring of the budget

and procurement

implementation, review of the

budget and procurement

implementation twice per year.

Planning for 2018-2020 started in

August 2016.

Monthly budget monitoring

reports issued.

Monthly procurement monitoring

meetings held.

Quarterly review meetings of the

implementation of the AWP 2016

held.

102

Title: Staff involved in procurement

process may not be properly qualified

or familiar with relevant regulations,

rules and procedures and may not be

properly and consistently apply the

rules

Causes: staff involved in

procurement process have no

financial training and expertise, no

follow-up of the changes in the rules,

guidance

Consequences: non-compliance with

the legal and regulatory

requirements, waste of time and

resources

Expenditure Life Cycle training for

newcomers and staff, training on

procurement, regular workshop

and guidance on financial and

procurement practicalities

Trainings have been organised by

HR. Participation in the trainings

are mandatory and monitored.

Feedback mechanism put in place

on procurement performance.

Additional capacity provided to the

Procurement and Contracts

section in 2016.

103

b) Specific annexes related to "Assessment of the effectiveness of the internal control systems"

Standard Brief description of the action Status as of 31.12.2016

ICS 2 – Ethical and

Organisational

Values

‘e ie EIT s ethical guidance including provisions of conflict of

interest covering the EIT staff, GB

members and Experts.

Conflict of interest regarding the staff members:

Two trainings were provided by the EIT to the EIT staff members

regarding conflict of interests. The first training was focused on Ethics

& Integrity at the EIT-Building an Effective Organisational Culture while

the second training was conducted by the anti-fraud coordinator in

the context of the OLAF Anti-fraud Strategy. Both trainings aimed to

address the principles of professional ethics in the European

Institutions and agencies and the main staff obligations, in particular,

conflict of interests, external activities, freedom of expression and

discretion, gifts and Interest groups.

Briefings on the Ethical and Organisational Code of Conduct at the EIT,

specially on how staff members shall avoid potential or actual conflict

of interest, their obligations towards the EIT to declare external

activities, as well as gifts, favours and payments from governments or

any other source outside the institute, are provided by the EIT to the

newcomers on ad hoc basis by the EIT Ethics officer.

Several requests on prior permission for external activities have been

submitted to the Appointing Authority during 2016. All the requests

were carefully analysed in accordance to the provisions laid down in

the Staff Regulations. In some cases, staff members were requested

to provide further documents to support their request for

authorisation.

Staff members leaving the EIT are informed on their obligations after

leaving the service. EIT former staff members are obliged to submit

the declaration after leaving the service along with the job description

of the new tasks assigned to their new function, should this be the

case. The declaration needs to be done at least one month before the

staff member leaves the EIT. This has allowed the EIT to make a proper

assessment on whether the new occupational activity of the former

staff member would be incompatible with the interests of the EIT or

the EU.

A conflict of interests assess ent is also perfor ed the EIT regarding the declaration of absence of conflict of interest submitted

by the newcomers (contract agents, temporary agents, trainees and

national experts) before the signature of their contracts.

104

Conflict of interest regarding the Members of the EIT Governing

Board:

On 3 June 2015, the EIT Governing Board adopted Decision 13/2015

on the Code of Good Conduct on conflict of interests for members of

the EIT Governing Board. The revised code of conduct takes into

account lessons learnt from the past, best practices and findings and

recommendations issued by the EIT Internal Audit Capability. It

supports prompt identification and the consequent management of

any actual or potential conflicts of interests. It reflects a balanced

approach that aims to strengthen the decision making process by

effectively handling conflicts of interest. This Code of Conduct also

introduce three annual exercises on conflict of interest: Annual

Declaration of Interest, Call for KICs Declaration of Interest and KIC s Business Plan Declaration of Interest.

As laid down in the abovementioned Code of Good Conduct, members

of the Governing Board, an annual declaration on conflict of interest

was conducted by the EIT in the beginning of 2016. The ADoI for 2016

submitted by the members of the EIT Governing Board were published

on the EIT website. During the 2016 ADoI exercise, the EIT contacted

some members of the Governing Board regarding unclear and missing

information to complete the related declaration of interests. The final

assessment on the ADoI was finally produced by the EIT together with

the assessment on the absence of conflict of interest of the EIT GB

Members on the evaluation of the 2016 KIC proposals and 2017 KIC

Business plans, completed on 3 November 2016. Members of the

Governing Board were informed individually of the outcome of this

ADoI assessment and of the mitigation measures adopted in case an

actual or potential conflict of interest was identified.

Furthermore, the EIT conducted a detailed conflict of interest

verification regarding members of the EIT Governing Board for the

2017 financial allocation and for the 2016 Call for KIC proposals.

Governing Board members were requested to submit their

Declarations of Interest in view of the organisations that were either

Partners in established KICs (and therefore subject to the 2017

financial allocation) or were participating entities in consortia applying

for the 2016 Call for KIC proposals. The conflict of interest verification

exercise was finalised on 3 November 2016 and appropriate mitigating

measures were taken as a result of the assessment.

Finally, during the EIT Governing Board meetings held in 2016,

members of the Governing Board were asked to declare interests

which can could be considered prejudicial to their independence with

respect to the items on the agenda at the beginning of each Governing

Board meeting.

105

ICS 4 – Staff

evaluation and

development

Implement staff performance

evaluation based on annual

objectives.

Introduce career development with

reclassification system.

The second appraisal and reclassification exercise for the EIT was

conducted in 2016. Individual objectives of all staff members were

revised and training maps for each staff member were created.

ICS 5 - Objective

and performance

indicators

Continue de elop ent of the EIT s performance indicators in line with

the KIC s perfor ance indicators.

A comprehensive review of the existing Key Performance Indicator

(KPI) system used by EIT and its KICs was initiated in 2015 with the aim

to promote the use of results and impact KPIs. This resulted in an

agreement on 12 new EIT core KPIs to be used for the planning and

reporting/monitoring of KICs activities starting in 2017. The

framework for collected indicators was also adjusted to be able to

satisfy the required Horizon 2020 data from the EIT and its KICs.

ICS 8 – Processes

and procedures

Complete the assessment and

revision of the processes, procedures

and workflows based on the covering

operative and administrative

activities.

Several Standard Operating Procedures (SOPs) were revised and

updated in 2016, including on grant management, risk management

and procurement.

ICS 9 – Management

Supervision

Implement via SharePoint a

consolidated action plan covering

recommendations emerging from

audits, risk assessments and

consultations in order to facilitate

management supervision.

Consolidation partially completed: a single audit register is now

maintained covering all audit findings. Separate action plans for units

are still maintained to focus on a limited set of key operational and

procedural priorities. A consolidated register of strategic

recommendations stemming from various evaluations and reviews

will be set up in 2017.

ICS 15 – Assessment

of internal control

standards

Evaluation of the implementation of

the internal control system after four

years of activities as “partiall autono ous institute to support the analysis of organisational maturity to

reach full financial autonomy.

The progress in EIT s control en iron ent and the i pro ed aturit of the Institute s grant anage ent and ad inistrati e processes

enabled the EIT to request the partner DG (DG EAC) to re-launch the

process towards full financial autonomy in July 2015. DG EAC officially

launched the process in June 2016 by requesting the EIT to complete

a self-assessment. The EIT submitted the completed self-assessment

to the Commission in October 2016. Granting full financial autonomy

by the Commission is foreseen for Q2 2017.

ICS 16 – Internal

audit capability

Coordinate and agree with the IAS

the multi-annual strategic audit plan.

The Internal Audit Capability of the EIT has coordinated its work plan

with the Internal Audit Service of the European Commission regarding

the 2015-2017 audit period.

As a result, the Governing Board endorsed the IAC and IAS Strategic

Internal Audit Plans on 5 March 2015.

106

Annex VIII: Final annual accounts 2016

02518.EIT.2017.I.GB46

1

DECISION 12/2017

OF THE GOVERNING BOARD OF

THE EUROPEAN INSTITUTE OF INNOVATION AND TECHNOLOGY (EIT)

ON THE OPINION OF THE GOVERNING BOARD ON THE FINAL ACCOUNTS 2016

THE GOVERNING BOARD OF THE EUROPEAN INSTITUTE OF INNOVATION AND TECHNOLOGY,

Having regard to Regulation (EC) No 294/2008 establishing the European Institute of Innovation and Technology1, as

amended by Regulation (EU) No 1292/2013 of the European Parliament and of the Council of 11 December 20132,

(hereinafter the EIT Regulation) and in particular, Article 21 (3) and Section 2(a) and 4.3 (j) to the Statutes annexed

thereto hereinafter the Statutes ;

Having regard to Commission Delegated Regulation (EU) No 1271/2013 of 30 September 2013 on the framework

financial regulation for the bodies referred to in Article 208 of Regulation (EU, Euratom) No 966/2012 of the European

Parliament and of the Council, in particular Article 99.23;

Having regard to Decision4 of the Governing Board of the EIT of 27 December 2013 on adopting the Financial Regulation

of the European Institute of Innovation and Technology (hereinafter the Financial Regulation of the EIT ) as amended

by Decision 6/20155 of the Governing Board of the EIT of 5 March 2015, and by Decision 11/2016 of the Governing

Board of the EIT of 20 April 2016,6

Having regard to the preliminary observations of the European Court of Auditors on the provisional annual accounts

2016 of the EIT, forwarded to the EIT Interim Director by the President of the Court of Auditors on 23 May 2017;

Having regard to the final accounts drawn up by the Accounting Officer on 29 May 2017 and submitted by the EIT

Interim Director to the EIT Governing Board on 8 June 2017;

WHEREAS

(1) The final accounts of the EIT shall be sent by 1 July 2017 together with the opinion of the Governing Board,

to the account officer of the Commission, the Court of Auditors, the European Parliament and the Council,

(2) The EIT s final accounts are attached as Annex I to this decision;

(3) An excerpt from the final accounts shows the following information:

1 OJ L97 of 09.04.2008, p. 1. 2 OJ L347 of 20.12.2013, p. 174. 3 OJ L 328, 7.12.2013, p. 42–68 4 01364.EIT.2014.I 5 00101.EIT.2015.I.GB34 6 00673.EIT.GB.2016.WP

02518.EIT.2017.I.GB46

2

STATEMENTS OF FINANCIAL PERFORMANCE 31.12.2016

01.01.2016 31.12.2016

01.01.2015 31.12.2015

Subsidy of the Commission 264.437.708,42 220.602.473,77 Host state contribution 0,00 1.560.000,00 Revenues from admin operations - fixed asset income 6.849,73 0,00 Other operating revenue 617.558,17 456.339,37

TOTAL OPERATING REVENUE 265.062.116,32 222.618.813,14 Staff expenses 3.530.404,56 3.197.247,44 Fixed asset related expenses 169.484,25 72.975,50 Other administrative expenses 1.409.426,22 1.130.139,76 Operational expenses 244.876.808,06 226.902.884,34

TOTAL ADMINISTRATIVE AND OPERATIONAL EXPENSES 249.986.123,09 231.303.247,04 SURPLUS/(DEFICIT) FROM OPERATING ACTIVITIES 15.075.993,23 (8.684.433,90) Financial operations revenues 0,00 214,48 Financial operations expenses 3.060,87 20.194,96 SURPLUS/ (DEFICIT) FROM FINANCIAL ACTIVITIES (3.060,87) (19.980,48) SURPLUS/(DEFICIT) FROM ORDINARY ACTIVITIES 15.072.932,36 (8.704.414,38) Extraordinary gains 0,00 0,00

Extraordinary losses 0,00 0,00 SURPLUS/(DEFICIT) FROM EXTRAORDINARY ITEMS 0,00 0,00

ECONOMIC RESULT OF THE YEAR 15.072.932,36 (8.704.414,38)

02518.EIT.2017.I.GB46

3

HAS DECIDED AS FOLLOWS:

On the basis of the examination of the final accounts, presented by the EIT Interim Director to the Governing Board

of the European Institute of Innovation &Technology EIT , and on the basis of the preliminary observations of the

European Court of Auditors on the provisional annual accounts 2015 of the EIT, the Governing Board of the EIT gives

a favourable opinion on the final accounts drawn up by the EIT Accounting Officer for 2016.

Done in Berlin on 15 June 2017

Signed

Peter Olesen

Chairman of the EIT Governing Board

Annex 1: Final Accounts 2016 of the European Institute of Innovation and Technology

FINAL ACCOUNTS OF THE

EUROPEAN INSTITUTE

OF

INNOVATION AND TECHNOLOGY

(EIT)

and

REPORT ON THE IMPLEMENTATION OF THE BUDGET

01.01.2016 – 31.12.2016

European Institute of Innovation and Technology (EIT)

www.eit.europa.eu

The EIT is a body of the European Union Budapest | 29 May 2017

http://www.eit.europa.eu/

29/05/2017 EIT Final Accounts 2016 1

Contents INTRODUCTION .......................................................................................................... 4

PART I: - FINANCIAL STATEMENTS .............................................................................. 6

STATEMENTS OF FINANCIAL PERFORMANCE .............................................................. 7

BALANCE SHEET ......................................................................................................... 8

CAPITAL AND LIABILITIES ........................................................................................... 9

CASH FLOW STATEMENT .......................................................................................... 10

STATEMENT OF CHANGES IN CAPITAL ....................................................................... 11

NOTES TO THE GENERAL ACCOUNTS ........................................................................ 12

STATEMENTS OF FINANCIAL PERFORMANCES .......................................................... 16

BALANCE SHEET ....................................................................................................... 19

EQUITY AND LIABILITIES ........................................................................................... 23

CONTINGENT LIABILITIES ......................................................................................... 26

CONTINGENT ASSETS ............................................................................................... 28

CHANGES IN ACCOUNTING POLICIES ......................................................................... 28

1. Budget result ....................................................................................................... 30

2. Reconciliation of the budget and economic result ....................................................31

3. Revenue .............................................................................................................. 32

4. Expenditure ......................................................................................................... 33

5. Explanatory notes to the report on the implementation of the budget ..................... 41

ANNEX TO THE ANNUAL ACCOUNTS ......................................................................... 45

signed


PART I – Financial statements



INTRODUCTION

LEGAL BASIS

The following accounts, together with a report on budgetary and financial management were drawn up in

accordance with Article 21 (3) of Regulation (EC) No 294/2008 of the European Parliament and of the Council of

11 March 2008 amended with Regulation No 1292/2013 of 11 December 2013 establishing the European Institute

of Innovation and Technology (hereinafter referred to as "EIT Regulation") and Article 98 of the EIT Financial

Regulation.

BACKGROUND INFORMATION

This report and financial statements have been drawn up for the EIT, a European Union body established by

Regulation (EC) No 294/2008 of the European Parliament and of the Council of 11 March 2008.

The mission of the EIT is to increase European sustainable growth and competitiveness by reinforcing the

innovation capacity of the EU (Article 3, EIT Regulation). The seat of EIT is in Budapest.

http://eit.europa.eu/fileadmin/Content/Downloads/PDF/Official_documents/l_09720080409en00010012.pdf


The EIT’s expenditures are financed by an annual subsidy from the general budget of the European Union and

by a EFTA and third countries contributions.

The Governing Board is the principal governing body of the EIT entrusted with the role of strategic leadership

and the overall direction of the operational activities implemented by the EIT Headquarters. It is composed of

high-level members experienced in higher education, research, innovation and business. It shall be responsible

for steering the activities of the EIT, for the selection, designation and evaluation of the KICs, and for all other

strategic decisions. It consists of 12 Appointed Members.

The Chairman of the Governing Board for 2016 was Mr Peter Olesen.

The Institute is managed by the EIT Interim Director, Mr. Martin Kern. In accordance with Article 1(c) of the EIT

Regulation and Article 39 of the EIT Financial Regulation, the Director is the authorising officer for the EIT

budget.

In accordance with Article 50 (1) of the EIT Financial Regulation the Governing Board appointed Davide Mola as

accounting officer for the EIT on 28 June 2012 following a recruitment procedure.


PART I: - FINANCIAL STATEMENTS


STATEMENTS OF FINANCIAL PERFORMANCE

01.01.2016 - 31.12.2016

STATEMENTS OF FINANCIAL PERFORMANCE 31.12.2016

01.01.2016 31.12.2016

01.01.2015 31.12.2015

Subsidy of the Commission 264.437.708,42 220.602.473,77 Host state contribution 0,00 1.560.000,00 Revenues from admin operations - fixed asset income 6.849,73 0,00 Other operating revenue 617.558,17 456.339,37 TOTAL OPERATING REVENUE 265.062.116,32 222.618.813,14

Staff expenses 3.530.404,56 3.197.247,44 Fixed asset related expenses 169.484,25 72.975,50 Other administrative expenses 1.409.426,22 1.130.139,76 Operational expenses 244.876.808,06 226.902.884,34

TOTAL ADMINISTRATIVE AND OPERATIONAL EXPENSES 249.986.123,09 231.303.247,04 SURPLUS/(DEFICIT) FROM OPERATING ACTIVITIES 15.075.993,23 (8.684.433,90) Financial operations revenues 0,00 214,48 Financial operations expenses 3.060,87 20.194,96 SURPLUS/ (DEFICIT) FROM FINANCIAL ACTIVITIES (3.060,87) (19.980,48) SURPLUS/(DEFICIT) FROM ORDINARY ACTIVITIES 15.072.932,36 (8.704.414,38) Extraordinary gains 0,00 0,00 Extraordinary losses 0,00 0,00 SURPLUS/(DEFICIT) FROM EXTRAORDINARY ITEMS 0,00 0,00 ECONOMIC RESULT OF THE YEAR 15.072.932,36 (8.704.414,38)


BALANCE SHEET

31.12.2016

ASSETS

31.12.2016 31.12.2015 A. NON CURRENT ASSETS Intangible fixed assets 333.830,65 250.022,28 Tangible fixed assets 231.233,00 177.999,00 Land and buildings 0,00 0,00 Plant and equipment 0,00 0,00 Computer hardware 165.385,00 133.492,00 Furniture and vehicles 40.869,00 43.411,00 Other fixtures and fittings 24.979,00 1.096,00 Tangible fixed assets under construction 0,00 0,00 Long-term receivables 1.135,14 1.135,14 Long-term pre-financing 1.135,14 1.135,14 Long-term receivables with consolidated EC entities 0,00 0,00

TOTAL NON CURRENT ASSETS 566.198,79 429.156,42 B. CURRENT ASSETS Stock 0,00 0,00 Short-term receivables 731.834,67 527.442,07 Short term prefinancing 0,00 0,00 Current receivables 746.970,27 556.767,75 Long term receivables falling due within a year 0,00 0,00 Sundry receivables (15.135,60) (35.993,46) Prepaid expenses and accrued income 0,00 6.667,78

Cash and cash equivalents 7.071.921,26 7.756.960,45

TOTAL CURRENT ASSETS 7.803.755,93 8.284.402,52 TOTAL 8.369.954,72 8.713.558,94


CAPITAL AND LIABILITIES

31.12.2016

31.12.2016 31.12.2015 A. CAPITAL

Accumulated surplus/deficit (89.207.253,89) (80.502.839,51) Economic result of the year 15.072.932,36 (8.704.414,38)

TOTAL CAPITAL (74.134.321,53) (89.207.253,89) B. NON CURRENT LIABILITIES Provisions for risks and liabilities 0,00 0,00 Long-term liabilities with consolidated entities 0,00 0,00 TOTAL NON CURRENT LIABILITIES 0,00 0,00 C. CURRENT LIABILITIES

Provisions for risks and liabilities 50.000,00 50.000,00 Accounts payable 82.454.276,25 97.870.812,83

Current payables (28.028,47) (3.437,31) Long-term liabilities falling due within the year 0,00 0,00 Sundry payables 22.190,38 25.781,62 Accrued expenses and deferred income 75.355.734,13 89.866.676,05 Accounts payable with consolidated EC entities 7.104.380,21 7.981.792,47

TOTAL CURRENT LIABILITIES 82.504.276,25 97.920.812,83

TOTAL 8.369.954,72 8.713.558,94


CASH FLOW STATEMENT

31.12.2016

01.01.2016 31.12.2016

01.01.2015 31.12.2015

Cash Flows from ordinary activities Surplus/(deficit) from ordinary activities 15.072.932,36 -8.704.414,38 Operating activities

Adjustments

Amortization (intangible fixed assets) + 82.731,97 5.494,00

Depreciation (tangible fixed assets) + 78.587,91 67.481,50

Increase/(decrease) in Provisions for risks and liabilities 0,00 0,00

Increase/(decrease) in Value reduction for doubtful debts 0,00 0,00

(Increase)/decrease in Stock 0,00 0,00

(Increase)/decrease in Long term Pre-financing 0,00 0,00

(Increase)/decrease in Short term Pre-financing 0,00 0,00

(Increase)/decrease in Long term Receivables 0,00 0,00

(Increase)/decrease in Short term Receivables -204.392,60 -163.270,95

(Increase)/decrease in Receivables related to consolidated EU entities 0,00 0,00

Increase/(decrease) in Other Long term liabilities 0,00 0,00

Increase/(decrease) in Accounts payable -14.539.124,32 11.560.915,97

Increase/(decrease) in Liabilities related to consolidated EU entities -877.412,26 0,00

Other non-cash movements 0,00 0,00

Net cash Flow from operating activities -386.676,94 2.766.206,14

Cash Flows from investing activities Increase of tangible and intangible fixed assets (-) -298.362,25 -182.229,50

Proceeds from tangible and intangible fixed assets (+)

Net cash flow from investing activities -298.362,25 -182.229,50

Net increase/(decrease) in cash and cash equivalents -685.039,19 2.583.976,64

Cash and cash equivalents at the beginning of the period 7.756.960,45 5.172.983,81

Cash and cash equivalents at the end of the period 7.071.921,26 7.756.960,45


STATEMENT OF CHANGES IN CAPITAL

Capital Reserves Accumulated

Surplus / Deficit

Economic result of the

year Capital (total)

Balance as of 31 December 2015 0,00 (80.502.839,51) (8.704.414,38) (89.207.253,89) Changes in accounting policies 0,00

Balance as of 1 January 2016 0,00 (80.502.839,51) (8.704.414,38) (89.207.253,89)

Allocation of the Economic Result of Previous Year (8.704.414,38) 8.704.414,38 0,00 Economic result of the year 15.072.932,36 15.072.932,36

Balance as of 31 December 2016 0,00 (89.207.253,89) 15.072.932,36 (74.134.321,53)


NOTES TO THE GENERAL ACCOUNTS

01.01.2016 – 31.12.2016

ACCOUNTING POLICIES AND PRINCIPLES

In accordance with Article 21 (3) of Regulation (EC) No 1292/2013 of the European Parliament and of the Council

of 11 March 2008 establishing the European Institute of Innovation and Technology (hereinafter referred to as

"EIT Regulation") and Article 92 of the EIT Financial Regulation of 27 December 2013, the following final accounts

together with a report on budgetary and financial management have been drawn up. These financial statements

for the financial year 2016 are prepared on the basis of the EC Accounting Rules which adapt the International

Public Sector Accounting Standards (and in some cases the International Financial Reporting Standards) to the

specific environment of the European Union, while the reports on implementation of the budget continue to be

primarily based on movements of cash. They also follow Commission Regulation No 1268/2012 (hereinafter

referred to as the Implementing Rules).

The objective of financial statements is to provide information about the financial position, performance and

cash flows of an entity that is useful to a wide range of users. For a public sector entity such as the EIT, the

objective is more specifically to provide information useful for decision making, and to demonstrate the

accountability of the entity for the resources entrusted to it.

The accounting system of the EIT comprises general accounts and budgetary accounts. The accounts are kept in

EUR and are accounted on the basis of a financial year equal to the calendar year. The budgetary accounts give

a detailed picture of the implementation of the budget. They are based on the modified cash accounting

principle.1 The general accounts allow for the preparation of the financial statements as they show all charges

and income for the financial year and are designed to establish the financial position in the form of a balance

sheet at 31 December.

The EIT financial statements have been drawn up using the methods of preparation set out in the accounting

rules laid down by the European Commission’s accounting officer.

Article 95 of the EIT Financial Regulation sets out the accounting principles to be applied in drawing up the

financial statements:

1 This differs from cash-based accounting because of elements such as carryovers.


Going concern basis

The financial statements have been made in accordance with the going concern principle, which means that

the EIT is deemed to have been established for an indefinite duration (IPSAS 1; Financial Regulation, Article

143).

Prudence

Assets and income in these financial statements have not been overstated, and liabilities and expenses have

not been understated. No hidden reserves have been created (IPSAS 1; Financial Regulation, Article 143).

Consistent accounting method

According to this principle the accounting methods and valuation rules may not be changed from one year to

the next (IPSAS 1; Financial Regulation, Article 143).

Comparability of information

In accordance with this principle, the financial statements shall show for each item the amount of the

corresponding item for the previous year. Where the presentation or the classification of one of the

components of the financial statements has been changed, the corresponding amounts for the previous year

shall be made comparable and reclassified (IPSAS 1; Financial Regulation, Article 143).

Materiality

According to this principle, items that are material by virtue of their nature should be presented separately in

the financial statements. Items that are material by virtue of their size but which have the same nature may be

aggregated. Immaterial amounts should be aggregated with amounts of a similar nature or function and need

not be presented separately (IPSAS 1; Financial Regulation, Article 143).


No netting

The principle of no netting means that assets and liabilities may not be offset against each other, nor may

revenues and expenses, save where the revenues and expenses derive from the same transaction, from similar

transactions or from hedging operations and provided that they are not individually material (IPSAS 1;

Financial Regulation, Article 143).

Reality over appearance (Substance Over Form)

This principle states that if information is to represent faithfully the transactions and other events that it

purports to represent, it is necessary that they are accounted for and presented in accordance with their

substance and economic reality and not merely their legal form. The substance of transactions or other events

is not always consistent with their legal form (IPSAS 1; Financial Regulation, Article 143).

Accrual-based accounting

Accrual based accounting is an accounting method that measures the performance and position of the entity

by recognizing economic events regardless of when cash transactions occur. (Income and expense items are

recognized and recorded when income is earned and expense is incurred, regardless of when cash is actually

received or paid.) (IPSAS 1; EIT Financial Rules, Article 79 (1.); Financial Regulation, Article 143).

Reporting period

The EIT reporting period is from 1 January to 31 December 2016.


CURRENCY AND BASIS FOR CONVERSION

Functional and reporting currency

The financial statements are presented in Euro, which is the functional and reporting currency of the EIT (EIT

Financial Regulation, Article 96).

Transactions

Foreign currency transactions were translated into Euros using the official exchange rates of the European

Commission of the day on which the payment order was drawn up (Implementing Rules, Article 5).

Foreign exchange gains and losses resulting from the settlement of foreign currency transactions are

recognised in the economic outturn account.

CHART OF ACCOUNTS

The chart of accounts used by EIT follows the structure of the chart of accounts of the European Commission

(PCUE).


STATEMENTS OF FINANCIAL PERFORMANCES

Non-Exchange Revenue

Non-exchange revenues for 2016 consist of the subsidy and other operational revenue received from the

European Commission.

2016 2015

EC subsidy 264 437 708,42 220 602 473,77

Host state contribution 0,00 1 560 000,00

Recoveries of GA 600 688,48 431 827,42

Miscellaneous income 7 197,30 11 261,60

Exchange rate gains 16 540,12 13 250,35

Total 265 062 116,32 222 618 813,14

The Institute make pre financing (transactions) for grants during the financial year and final payments in the

following year. The Institute makes accrual on the grant amount based on KICs’ final settlement and payment requests. After the final payment by EIT, an ex-post audit on sample transactions take place.

Service in-kind - Host state contribution to the EIT premises

According to Article 3(3) of the Host Agreement the Hungarian Government covers the rental fee of the EIT

premises for 20 years. For such in-kind services the EIT follows the non-recognition approach therefore the

contribution was not recognised as revenue (and asset) in the EIT books.

The Hungarian Government contribution to the rental fee constitutes EUR 547 524,48 in kind revenue per

calendar year.


Expenses

According to the principle of the accrual-based accounting, financial statements take account of expenses

relating to the reporting period; without taking into consideration the payment date.

Administrative and operational expenses

Staff expenses comprise different categories of personnel related expenses: salaries, allowances, mission costs

and other welfare expenses. Fixed asset related expenses comprise the charged amortisation/depreciation.

Other administrative expenses comprise building associated costs, maintenance and service fees, office running

costs, the honoraria for the Governing Board and meeting expenses. Operational expenses comprise the KIC

grants, studies, expert fees, operational meeting and other operative expenses. The amount includes the pre-

financing already paid of 170 449 255,34 EUR.

Article 14 (6) of Regulation (EC) No 1292/2013 amending Regulation (EC) No 294/2008 establishing the European

Institute of Innovation and Technology stipulates that the EIT financial contribution shall not, on average, exceed

25% of a KIC’s overall funding over the EU budget period, from 1 January 2014 to December 2020. The rule shall

apply as an average at the end of the period, therefore the fulfilment cannot be measured reliably before 2021.

As a consequence, the proportion of the EIT funding in the KICs’ overall budget for 2016 is not known at the date

of the accounts and no financial impact was recorded for the financial year.

2016 2015

Staff expenses 3 530 404,56 3 197 274,44

Fixed asset related expenses 169 484,25 72 975,50

Other administrative expenses 1 409 426,22 1 130 139,76

Operational expenses 244 876 808,06 226 902 884,34

Total 249 986 123,09 231 303 247,04


Average number of employees

2016 2015

Temporary agents 33 30

Contract agents 19 19

Total 52 49

Note related to Payroll charges

All salary calculations giving the total staff expenses included in the Statement of financial performance of EIT

are externalized to the Office for administration and payment of individual entitlements (also known as the

Paymaster's Office-PMO) which is a central office of the European Commission.

The PMO's mission is to manage the financial rights of permanent, temporary and contractual staff working at

the Commission, to calculate and to pay their salaries and other financial entitlements. The PMO provides these

services to other EU institutions and agencies as well. The PMO is also responsible for managing the health

insurance fund of the Institutions, together with processing and paying the claims of reimbursement from staff

members. The PMO also manages the pension fund and pays the pensions of retired staff members. PMO is

being audited by the European Court of Auditors.

EIT is only responsible for the communication to the PMO of reliable information allowing the calculation of the

staff costs. It is also responsible to check that this information has been correctly handled in the monthly payroll

report used for accounting payroll costs. It is not responsible for the calculation of the payroll costs performed

by PMO.

Financial operations revenues (exchange revenue)

The EIT Financial Regulation provide the EIT with derogation; the funds paid to the EIT by the Commission by

way of the subsidy shall bear interest for the benefit of its budget. (EIT FR, Art. 58). No interest were collected

in 2016.

2016 2015

Bank interest 0,00 214,48

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BALANCE SHEET

ASSETS

Assets are resources controlled by the EIT as a result of past events and from which future economic benefits

or service potential are expected to flow.

EIT uses ABAC Assets, which is an integrated part of the ABAC platform, as inventory application.

Fixed assets

Fixed assets are assets that are expected to be used during more than one reporting period. The fixed assets in

these financial statements are valued at their acquisition price or production cost. The book value of a fixed

asset is equal to its acquisition price or production cost, plus or minus revaluations, depreciation and other

amounts written off.

Intangible fixed assets

Intangible fixed assets are identifiable non-monetary assets without any physical form. In the EIT’s case these consist of computer software.

Tangible fixed assets

Tangible fixed assets are assets of physical nature, consisting of technical equipments, furniture, computer

hardware, telecommunication and audiovisual equipment.


Depreciation

Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life

(IPSAS 17). The depreciation on fixed assets is calculated using the straight-line method with the

following rates:

Depreciation rates

Type of asset Straight line depreciation rate

Computer software 25%

Technical equipment 12.5%

Vehicles 25%

Furniture 10%

Kitchen, cafeteria equipment 12.5%

Computer hardware 25%

Telecommunication and audiovisual equipment 25%


Details of the fixed assets’ depreciation can be found in the following table.

Internally generated Computer Software

Computer software

Plant and Equipment

Computer hardware

Furniture and vehicles

Other Fixtures and Fittings

Total

Gross carrying amounts 01.01.2016 + 36.197,00 270.209,43 1.235,76 359.933,70 93.181,79 50.093,60 810.851,28

Additions + 166.540,34 92.585,90 7.683,90 31.552,11 298.362,25 Gross carrying amounts 31.12.2016 36.197,00 436.749,77 1.235,76 452.519,60 100.865,69 81.645,71 1.109.213,53

0,00 Accumulated amortization and impairment 01.01.2016

- -56.384,15 -1.235,76 -226.441,70 -49.770,79 -48.997,60 -382.830,00

Depreciation - -82.732,34 0,00 -60.692,90 -10.225,90 -7.669,11 -161.320,25 Accumulated amortization and impairment 31.12.2016

0,00 -139.116,49 -1.235,76 -287.134,60 -59.996,69 -56.666,71 -544.150,25

Net carrying amounts 31.12.2016

36.197,00 297.633,28 0,00 165.385,00 40.869,00 24.979,00 565.063,28


Receivables

Receivables are carried at original invoice amount less write-down for impairment. A write-down for

impairment of receivables is established when there is objective evidence that the EIT will not be able

to collect all amounts due according to the original terms of receivables. The amount of the write-down

is recognised in the economic outturn account statement.

Short term and long term receivables

Long term:

2016 2015

Fee paid to supplier 1 135,44 1 135,44

Total 1 135,44 1 135,44

Short-term:

2016 2015

Receivable from customers 0,00 5 250,74

Recoveries grant 600 688,48 431 827,42

Receivables from consolidated entities 0,00 85,84

Recoverable VAT from host state 146 281,79 119 603,75

Accrued income/deferred charges

Sundry receivables

0,00 6 667,78

-35 993,46 -15 135,60

Total 731 834,67 527 442,07

The prepayments consist of prepaid maintenance fees.


Cash and cash equivalents

2016 2015

Bank accounts 7 071 921,26 7 756 960,45

Total 7 071 921,26 7 756 960,45

The bank accounts are held with BNP Paribas Fortis (Fortis Bank nv/sa) in Belgium for the EUR currency

and in Hungary for the HUF account.

EQUITY AND LIABILITIES

Provisions for risks and liabilities

Provisions for risks and liabilities are recognised when EIT has a present legal or constructive obligation

as a result of past events; an outflow of resources might be required to settle the obligation, and the

amount can be reliably estimated.

The amount of 50 000,00 EUR is intended to cover the legal expenses related to a procurement

procedure.

Short term provisions

2016 2015

Provision 50 000,00 50 000,00


Current payables

The accounts payable as at 31 December 2016 comprise outstanding unpaid invoices and claims from

the suppliers, beneficiaries and other public bodies.

2016 2015

Accounts payable 139 642,33 14 149,25

Total 139 642,33 14 149,25

Accrued expenses and deferred income

2016 2015

Accrued expenses 75 355 734,13 89 866 676,05

Deferred income 0,00 0,00

Total 75 355 734,13 89 866 676,05

Accrued expenses are expenses that have been incurred but not yet paid. The majority of the booked

accruals are related to KIC grant agreements (EUR 74 003 442,52). The other expenses are related to

operational and, for a residual part, administrative/staff expenses.

The calculated amount of holiday compensation is recognised as accrued expense (according to the

Staff regulation - Annex V: Leave, Article 4 - if the person at the time of leaving the service has not used

up his/her annual leave, he/she shall be paid compensation equal to one thirtieth of his monthly

remuneration for each day of leave due to him/her).


Accounts payable with consolidated EU entities

2016 2015

Open pre-financing 2016 1 661 743,46 -

Open pre-financing 2015 4 539 755,39 7 979 629,89

Other payables to consolidated EU entities 902 881,36 2 162,58

Total 7 104 380,21 7 981 792,47

Article 14 of the EIT Financial Regulation, derogations allow for the possibility to re-enter unused

appropriations, appropriations carried over and decommitted appropriations in the estimate of revenue

and expenditure up to the following three financial years.

Article 58 of the EIT Financial Rules grants derogation as regards the interest earned on the subsidy

payments: the funds paid to the EIT by the Commission by way of the subsidy bears interest for the

benefit of its budget.


CONTINGENT LIABILITIES

A contingent liability is a possible obligation that arises from past events and of which the existence will

be confirmed only by the occurrence or non-occurrence of one or more uncertain future events; or a

present obligation that arises from past events but is not recognised because the amount of the

obligation cannot be measured with sufficient reliability.

Operational leases

Operational leases are classified as such where the lessor retains a significant portion of the risks and

rewards of ownership. Lease payments under an operating lease are recognised as an expense in the

economic outturn account on a straight-line basis over the lease term. Assets subject to an operating

lease are treated as rentals.

EIT has no operational lease contracts.

Carryovers

The EIT recognises the difference between the amount of the automatic carryover of commitment

appropriations (the budgetary commitment is the operation reserving the appropriation necessary to

cover subsequent payments to honour a legal commitment) and the accrued expenses as a contingent

liability.

2016 2015

Automatic carryovers (C8) 1 020 677,89 759 478,94

Accrued expenses (75 355 734,13) (89 866 676,05)

Contingent liabilities for carryovers (74 335 056,24) (89 107 197,11)


Amounts relating to legal cases

EIT has a provision of EUR 50 000,00 related to a procurement procedure launched in 2015.

Long term/Multi-annual contractual commitments

A commitment for future funding is a possible future outflow of resources that could arise due to a legal

or contractual commitment existing at year end. Significant long-term service contracts fall under this

category.

The EIT has no existing multi-annual contracts without budgetary commitments.

2016 2015

Operational leases - -

Carryovers 1 020 677,89 759 478,94

Legal case - -

Multi-annual contractual

commitments

- -

Contingent liabilities 1 020 677,89 759 478,94


CONTINGENT ASSETS

Contingent assets are possible assets that arise from past events and whose existence will be confirmed

only by the occurrence or non-occurrence of one or more uncertain future events but which are not

recognised because the amount of the obligation cannot be measured with sufficient reliability.

Guarantees received for pre-financing

Articles 124 of the EU Financial Regulation and Article 182 of the Implementing Rules allow the

Authorising Officers, if appropriate and proportionate, to require an advance guarantee for pre-

financing.

EIT is part of the H2020 Guarantee Fund, set up under Regulation (EC) No 1906/2006 of the European

Parliament and of the Council, to cover the risk associated with non-recovery of sums due to EIT under

actions financed through grants.

RELATED PARTIES

The table below shows the highest staff grade of the entity, the number of persons in this grade and the

loans at preferential rates received by these persons from your entity or any other EU consolidated entity.

This doesn't include advances on salaries or the repayment of sickness fund overpayments.

Highest grade description GradeNumber of persons of this

gradeNominal amount

Remaining open amount as of 31/12

Interim Director AD11 1 - -

CHANGES IN ACCOUNTING POLICIES

There have been no changes in accounting policies for the financial year 2016.

http://intracomm.ec.testa.eu/budg/leg/finreg/leg-020-25_finreg2002_en.html#118

http://intracomm.ec.testa.eu/budg/leg/ir/leg-030-40_ir2003_en.html#182


PART II - Report on the

implementation of the budget



1. Budget result

EUR

2016 2015

Revenue for the financial year + 263,990,494.08 228,848,153.12

Payments against current year appropriations (C1, C4, C5, R0) - 261,615,260.93 223,016,442.62

Payment appropriations carried over to year N+1 - 1,020,677.89 759,478.94

Cancellation of unused payment appropriations carried over from

year N-1 (C2,C8)+ 54,223.16 635,963.98

Adjustment for carry-over from previous year of appropriations

available at 31.12 arising from assigned revenue (C5)+ 263,239.16 725,281.44

Exchange differences for the year (gain+/loss-) +/- -10,274.12 -18,369.75

1,661,743.46 6,415,107.23

Balance year N-1 + 7,979,629.89 4,291,706.65

Positive balance from year N-1 reimbursed in year N to the

Commission - 2,727,183.99

Positive balance from year N-1 reimbursed in year N+1 to the

Commission - 894,505.58

Payments on re-entered appropriations cancelled in year N-1 and N-

2 - 2,545,368.92

6,201,498.85 7,979,629.89

Interest generated on the Commission's subsidy + 0 214.68

Budget result

Balance year N


2. Reconciliation of the budget and economic result

EUR

Table 2 - Reconciliation of the budgetary and

economic outturn 2016 2015

ECONOMIC RESULT 15.072.932,36 -8.704.414,38

Adjustments for accrual cut off reversal 31.12.N-1 -89.866.676,05 -82.016.338,73

Adjustments for accrual cut off reversal 31.12.N 75.355.734,13 89.866.676,05

Unpaid invoices at year end but booked in charges 0,00 0,00

Depreciation of intangible and tangible assets 161.320,25 72.975,50

Provisions 0,00 0,00

Payments made from carry over of payment

appropriations 442.016,62 525.642,64

Other revenue 0,00 -214,48

Asset acquisitions -298.362,25 -182.229,50

Recovery orders (grants) not yet cashed -600.688,48 -431.827,42

Recovery orders (grants) from previous years cashed in

2016 4.583,70 263.239,16

Recovery orders (others) not yet cashed 0,00 0,00

Pre-financing open at the end of 2015 and paid in 2016 0,00 0,00

Payment appropriations carried over -588.850,47 -759.478,94

Cancellation of unused carried over payment

appropriations from previous year 54.223,16 635.963,98

Carry-over from previous year of appropriations available

at 31.12 arising from assigned revenue 263.239,16 725.281,44

Accrued income/ Deferred Charges 0,00 6.667,78

Release of provision against unrealized gain/losses 0,00 0,00

Pre-financing open with the Commission 1.661.743,46 6.415.107,23

Others 527,87 -1.943,10

Total 1.661.743,46 6.415.107,23

BUDGETARY RESULT 1.661.743,46 6.415.107,23


3. Revenue

200 European Union subsidy 252,158,953.03 252,158,953.03 252,158,953.03 0.00

300Contributions by the EFTA

member states6,875,046.93 6,875,046.93 6,875,046.93 0.00

310 Contributions by third countries 4,520,083.00 4,520,083.00 4,520,083.00 0.00

570Revenue arising from repayment

of amounts wrongly paid4,583.70 4,583.70 4,583.70 0.00

590Other revenue from administrative

operations0.00 329.57 0.00 329.57

600 Surplus, balances 7,065,708.31 0.00

701

Repayment of KICs grants incurred

as a result of an ex-post audit

(assigned revenue)

695,066.58 263,239.16 431,827.42 263,239.16 431,827.42 0.00

TOTAL 271,319,441.55 267,822.86 263,986,239.95 263,239.16 263,990,494.08 329.57

Outstanding

amounts, EUR

(1+2-3-4)

Income

appropriation,

EUR

Entitlements

established in

2016, EUR (2)

Revenue

received, EUR

(4)

Entitlements

established in

2015, EUR (1)

Revenue carried

over from 2015,

EUR (3)

Income

lineIncome line header


4. Expenditure a. Breakdown and changes in commitment and payment appropriations per

chapter

Appropriations

adopted, EUR

Modifications

(transfers and

AB), EUR



11Staff in active

employment3,843,060.00 -428,000.00 3,415,060.00


13 Mission 250,000.00 -52,000.00 198,000.00

14Socio-medical

infrastructure102,800.00 -16,000.00 86,800.00

15 Training 90,000.00 -20,000.00 70,000.00



17 Representation 4,000.00 -2,000.00 2,000.00

5,112,162.00 -791,500.00 0.00 0.00 4,320,662.00


costs128,000.00 -79,065.00 48,935.00

21

Information and

communication

technology

465,000.00 -67,450.00 397,550.00




expenditure356,750.00 -69,850.00 286,900.00




1,488,280.00 -394,415.00 0.00 0.00 1,093,865.00

30 Grants 253,634,936.00 532,248.70 21,101,824.84 695,066.58 275,964,076.12

31Knowledge and

Innovation Communities1,375,000.00 433,010.00 1,808,010.00

32 EIT's impact 1,660,000.00 -498,560.00 1,161,440.00


and evaluation397,000.00 38,600.00 435,600.00

257,066,936.00 505,298.70 21,101,824.84 695,066.58 279,369,126.12

263,667,378.00 -680,616.30 21,101,824.84 695,066.58 284,783,653.12


not used in year n0.00 9,012,879.42 9,012,879.42

0.00 9,012,879.42 0.00 0.00 9,012,879.42

263,667,378.00 8,332,263.12 21,101,824.84 695,066.58 293,796,532.54

TOTAL

Title 4 - Total

GRAND TOTAL

COMMITMENT APPROPRIATIONS

Chapter

Title 1 - Total

Title 2 - Total

Title 3 - Total


Appropriations

adopted, EUR

Modifications

(transfers and

AB), EUR



11Staff in active

employment3,843,060.00 -428,000.00 3,415,060.00


13 Mission 250,000.00 -52,000.00 198,000.00

14Socio-medical

infrastructure102,800.00 -16,000.00 86,800.00

15 Training 90,000.00 -20,000.00 70,000.00



17 Representation 4,000.00 -2,000.00 2,000.00

5,112,162.00 -791,500.00 0.00 0.00 4,320,662.00


costs128,000.00 -79,065.00 48,935.00

21

Information and

communication

technology

465,000.00 -67,450.00 397,550.00




expenditure356,750.00 -69,850.00 286,900.00




1,488,280.00 -394,415.00 0.00 0.00 1,093,865.00

30 Grants 271,019,742.92 -16,090,203.26 2,545,368.92 695,066.58 258,169,975.16

31Knowledge and

Innovation Communities999,000.00 421,500.00 1,420,500.00

32 EIT's impact 1,092,500.00 513,000.00 1,605,500.00


and evaluation587,000.00 -398,400.00 188,600.00

273,698,242.92 -15,554,103.26 2,545,368.92 695,066.58 261,384,575.16

280,298,684.92 -16,740,018.26 2,545,368.92 695,066.58 266,799,102.16


not used in year n0.00 4,520,339.39 4,520,339.39

0.00 4,520,339.39 0.00 0.00 4,520,339.39

280,298,684.92 -12,219,678.87 2,545,368.92 695,066.58 271,319,441.55

TOTAL

Title 4 - Total

GRAND TOTAL

PAYMENT APPROPRIATIONS

Chapter

Title 1 - Total

Title 2 - Total

Title 3 - Total


4.2. Implementation of voted commitment and payment appropriations per Title

(C1 and C4)

4.3. Implementation of carried-over and re-entered commitment and payment

appropriations per Title (C3, C5 and C8)

Commitment Payment

Budget TitleFund

Source

Appropriations,

EUR

Commitments

made, EUR%

Appropriations,

EUR

Payments made,

EUR%

C1 4,320,662.00 4,164,316.62 96.38% 4,320,662.00 3,968,571.84 91.85%

4,320,662.00 4,164,316.62 96.38% 4,320,662.00 3,968,571.84 91.85%

C1 1,093,865.00 973,458.87 88.99% 1,093,865.00 580,353.18 53.06%

1,093,865.00 973,458.87 88.99% 1,093,865.00 580,353.18 53.06%

C1 257,572,234.70 244,774,789.20 95.03% 258,144,139.66 256,803,096.75 99.48%

C4 431,827.42 0.00% 431,827.42 0.00%

258,004,062.12 244,774,789.20 94.87% 258,575,967.08 256,803,096.75 99.31%

TOTAL 263,418,589.12 249,912,564.69 94.87% 263,990,494.08 261,352,021.77 99.00%

1 Staff expenditure

2 Infrastructure

and operating

expenditure

3 Operational

expenditure

Commitment Payment

Budget TitleFund

Source

Appropriations,

EUR

Commitments

made, EUR%

Appropriations,

EUR

Payments made,

EUR%

C8 142,521.13 123,816.88 86.88% 142,521.13 123,816.88 86.88%

142,521.13 123,816.88 86.88% 142,521.13 123,816.88 86.88%

C8 353,718.65 318,199.74 89.96% 353,718.65 318,199.74 89.96%

353,718.65 318,199.74 89.96% 353,718.65 318,199.74 89.96%

C2 2,545,368.92 2,545,368.92 100.00%

C3 21,101,824.84 21,101,824.84 100.00%

C5 263,239.16 263,239.16 100.00% 263,239.16 263,239.16 100.00%

C8 106,207,327.81 92,552,449.98 87.14%

127,572,391.81 113,917,513.98 89.30% 2,808,608.08 2,808,608.08 100.00%

TOTAL 128,068,631.59 114,359,530.60 89.30% 3,304,847.86 3,250,624.70 98.36%

3 Operational

expenditure

1 Staff expenditure

2 Infrastructure

and operating

expenditure


4.4 Implementation of the commitment and payment appropriations

per budget item (C1)


Commitment

appropriations, EUR

(1)

Commitments

made, EUR (2)

%

Committe

d

(2/1)

Payment

appropriations, EUR

(3)

Payments made,

EUR (4)

% Paid

(4/3)

R A L

(2-4)

A-1100 Basic salaries including weightings 1,659,038.00 1,642,937.24 99.03% 1,659,038.00 1,642,937.24 99.03% -

A-1101 Allowances 587,425.00 582,045.70 99.08% 587,425.00 582,045.70 99.08% -

A-1102 Employers charges 130,597.00 127,165.19 97.37% 130,597.00 127,165.19 97.37% -

A-1110Remuneration and allowances of

contract agents728,000.00 722,723.18 99.28% 728,000.00 722,723.18 99.28% -

A-1120 Termination of service 20,000.00 - 0.00% 20,000.00 - 0.00% -

A-1121Entitlements related to entering the

service100,000.00 81,661.87 81.66% 100,000.00 81,661.87 81.66% -

A-1130 Schooling 190,000.00 188,671.75 99.30% 190,000.00 188,661.94 99.30% 9.81

Total 3,415,060.00 3,345,204.93 97.95% 3,415,060.00 3,345,195.12 97.95% 9.81

A-1200 Recruitment expenses 45,000.00 37,960.50 84.36% 45,000.00 37,960.50 84.36% -

Total 45,000.00 37,960.50 84.36% 45,000.00 37,960.50 84.36% -

A-1300 Mission expenses 198,000.00 198,000.00 100.00% 198,000.00 177,216.87 89.50% 20,783.13

Total 198,000.00 198,000.00 100.00% 198,000.00 177,216.87 89.50% 20,783.13

A-1400 Restaurants and canteens 500.00 418.48 83.70% 500.00 418.48 83.70% -

A-1410 Medical expenses 5,000.00 2,564.72 51.29% 5,000.00 2,564.72 51.29% -

A-1420Early childhood centre and

approved day nurseries75,000.00 75,000.00 100.00% 75,000.00 69,027.72 92.04% 5,972.28

A-1430Social contacts among staff

members6,300.00 5,266.06 83.59% 6,300.00 2,537.06 40.27% 2,729.00

Total 86,800.00 83,249.26 95.91% 86,800.00 74,547.98 85.88% 8,701.28

A-1500 Training 70,000.00 31,033.39 44.33% 70,000.00 10,517.99 15.03% 20,515.40

Total 70,000.00 31,033.39 44.33% 70,000.00 10,517.99 15.03% 20,515.40

A-1600 Agency staff 81,802.00 73,854.54 90.28% 81,802.00 5,960.08 7.29% 67,894.46

A-1601 Seconded National Expert 55,000.00 51,697.98 94.00% 55,000.00 51,697.98 94.00% -

A-1602 Trainees 39,000.00 33,564.12 86.06% 39,000.00 33,564.12 86.06% -

A-1603 IT support 171,000.00 160,269.00 93.72% 171,000.00 99,900.00 58.42% 60,369.00

A-1604 Administrative assistance 70,000.00 64,520.00 92.17% 70,000.00 47,048.30 67.21% 17,471.70

A-1611 Translation 87,000.00 84,585.65 97.22% 87,000.00 84,585.65 97.22% -

Total 503,802.00 468,491.29 92.99% 503,802.00 322,756.13 64.06% 145,735.16

A-1700 Representation expenses 2,000.00 377.25 18.86% 2,000.00 377.25 18.86% -

Total 2,000.00 377.25 18.86% 2,000.00 377.25 18.86% -

TOTAL - Title 1 4,320,662.00 4,164,316.62 96.38% 4,320,662.00 3,968,571.84 91.85% 195,744.78



Commitment

appropriations, EUR

(1)

Commitments

made, EUR (2)

%

Committe

d

(2/1)

Payment

appropriations, EUR

(3)

Payments made,

EUR (4)

% Paid

(4/3)

R A L

(2-4)

A-2000 Renting 6,000.00 6,000.00 100.00% 6,000.00 5,700.00 95.00% 300.00

A-2003 Water gas electricity and heating 20,000.00 20,000.00 100.00% 20,000.00 0.00% 20,000.00

A-2004 Cleaning and maintenance 16,400.00 13,833.34 84.35% 16,400.00 8,113.34 49.47% 5,720.00

A-2005 Security and surveillance 4,535.00 4,376.18 96.50% 4,535.00 806.18 17.78% 3,570.00

A-2006 Fitting out of premises 2,000.00 709.97 35.50% 2,000.00 709.97 35.50% -

Total 48,935.00 44,919.49 91.79% 48,935.00 15,329.49 31.33% 29,590.00

A-2100Acquisition renting of equipments

and software221,500.00 218,572.35 98.68% 221,500.00 115,497.45 52.14% 103,074.90


equipments176,050.00 175,671.62 99.79% 176,050.00 116,937.62 66.42% 58,734.00

Total 397,550.00 394,243.97 99.17% 397,550.00 232,435.07 58.47% 161,808.90

A-2200Acquisition general, technical

equipment3,700.00 3,568.90 96.46% 3,700.00 472.90 12.78% 3,096.00

A-2212 Transport cost 1,000.00 4.50 0.45% 1,000.00 4.50 0.45% -

A-2220 Acquisition of furniture 22,000.00 21,878.08 99.45% 22,000.00 21,878.08 99.45% -

Total 26,700.00 25,451.48 95.32% 26,700.00 22,355.48 83.73% 3,096.00

A-2300 Stationery and office supplies 9,900.00 9,887.77 99.88% 9,900.00 239.87 2.42% 9,647.90

A-2301 Postage and delivery charges 2,500.00 2,500.00 100.00% 2,500.00 2,376.05 95.04% 123.95

A-2302 Telecommunication charges 41,000.00 41,000.00 100.00% 41,000.00 22,847.67 55.73% 18,152.33

A-2303 Legal expenses and damages 25,000.00 24,020.00 96.08% 25,000.00 17,772.13 71.09% 6,247.87

A-2305 Bank charges 3,000.00 2,000.00 66.67% 3,000.00 924.17 30.81% 1,075.83

A-2306Honoraria for Governing Board

Members200,500.00 161,500.00 80.55% 200,500.00 157,500.00 78.55% 4,000.00

A-2309 Other administrative expenses 5,000.00 930.80 18.62% 5,000.00 930.80 18.62% -

Total 286,900.00 241,838.57 84.29% 286,900.00 202,590.69 70.61% 39,247.88

A-2400 Official Journal 2,000.00 908.40 45.42% 2,000.00 388.40 19.42% 520.00

A-2401 EIT publications 3,000.00 257.63 8.59% 3,000.00 257.63 8.59% -

A-2403 Studies and surveys 10,000.00 8,905.00 89.05% 10,000.00 0.00% 8,905.00

Total 15,000.00 10,071.03 67.14% 15,000.00 646.03 4.31% 9,425.00

A-2500Organisation and travel expenses of

Governing Board meetings310,780.00 254,147.04 81.78% 310,780.00 104,209.13 33.53% 149,937.91

A-2520 Internal meetings 8,000.00 2,787.29 34.84% 8,000.00 2,787.29 34.84% -

Total 318,780.00 256,934.33 80.60% 318,780.00 106,996.42 33.56% 149,937.91

TOTAL - Title 2 1,093,865.00 973,458.87 88.99% 1,093,865.00 580,353.18 53.06% 393,105.69

5,414,527.00 5,137,775.49 94.89% 5,414,527.00 4,548,925.02 84.01% 588,850.47 TOTAL - Title 1 and Title 2


4.5. Implementation of the commitment appropriations (C3) and payment

appropriations per budget item (C2)


Commitment

appropriations, EUR

(1)

Commitments

made, EUR (2)

%

Committe

d

(2/1)

Payment

appropriations, EUR

(3)

Payments made,

EUR (4)

% Paid

(4/3)

R A L

(2-4)

B3-000 KIC Grants 254,167,184.70 241,878,980.43 95.17% 254,929,539.66 254,145,577.62 99.69%

Total 254,167,184.70 241,878,980.43 95.17% 254,929,539.66 254,145,577.62 99.69%

B3-111 Planning, reporting and audits 1,537,010.00 1,482,631.68 96.46% 1,013,000.00 867,559.48 85.64%

B3-112 Knowledge Triangle Integration 71,000.00 70,188.28 98.86% 71,000.00 48,939.29 68.93%

B3-114 New KICs 200,000.00 98,273.05 49.14% 336,500.00 226,080.07 67.19%

Total 1,808,010.00 1,651,093.01 91.32% 1,420,500.00 1,142,578.84 80.43%

B3-202Communications and

Dissemination811,000.00 782,618.34 96.50% 803,500.00 757,938.15 94.33%

B3-203 Alumni 250,000.00 101,939.48 40.78% 150,000.00 99,689.83 66.46%

B3-204 Stakeholder relations 85,440.00 3,315.00 3.88% 591,000.00 475,037.03 80.38%

B3-205 Awards 15,000.00 15,000.00 100.00% 61,000.00 59,889.69 98.18%

Total 1,161,440.00 902,872.82 77.74% 1,605,500.00 1,392,554.70 86.74%

B3-301 EIT-KIC relations 100,000.00 37,989.00 37.99% 89,600.00 51,923.65 57.95%

B3-303 Monitoring and evaluation 335,600.00 303,853.94 90.54% 99,000.00 70,461.94 71.17%

Total 435,600.00 341,842.94 78.48% 188,600.00 122,385.59 64.89%

Total - Title 3 257,572,234.70 244,774,789.20 95.03% 258,144,139.66 256,803,096.75 99.48%

TOTAL 262,986,761.70 249,912,564.69 95.03% 263,558,666.66 261,352,021.77 99.16% 588,850.47

Budget


Commitment

appropriations,

EUR (1)

Commitments

made, EUR (2)

% Committed

(2/1)

Payment

appropriations,

EUR (3)

Payments made,

EUR (4) % Paid (4/3)

B3-000 KIC grants 21,101,824.84 21,101,824.84 100.00% 2,545,368.92 2,545,368.92 100.00%

Total 21,101,824.84 21,101,824.84 100.00% 2,545,368.92 2,545,368.92 100.00%


not used in year n9,012,879.42 - 0.00% 4,520,339.39 0.00%

Total 9,012,879.42 - 0.00% 4,520,339.39 - 0.00%

GRAND TOTAL 30,114,704.26 21,101,824.84 70.07% 7,065,708.31 2,545,368.92 36.02%


4.6. Implementation of the commitment and payment appropriations per budget

item (C4)


item (C5)

Budget


Commitment

appropriations, EUR

(1)

Commitments made,

EUR (2)

% Committed

(2/1)

Payment

appropriations,

EUR (3)

Payments made,

EUR (4) % Paid (4/3)

B3-000 KIC Grants 431,827.42 0,00 % 431,827.42 0,00 %

Total 431,827.42 - 0,00 % 431,827.42 - 0,00 %

Budget


Commitment

appropriations,

EUR (1)

Commitments

made, EUR (2)

% Committed

(2/1)

Payment

appropriations,

EUR (3)

Payments made,

EUR (4) % Paid (4/3)

B3-000 KIC Grants 263,239.16 263,239.16 100.00% 263,239.16 263,239.16 100.00%

Total 263,239.16 263,239.16 100.00% 263,239.16 263,239.16 100.00%



item (C8)

Budget


Commitment

appropriations,

EUR (1)

Commitments

made, EUR (2)

% Committed

(2/1)

Payment

appropriations,

EUR (3)

Payments made,

EUR (4)

% Paid

(4/3)

R A L

(2-4)

A-1300 Mission expenses 9,128.55 9,128.55 100.00% 9,128.55 9,128.55 100.00% -

Total 9,128.55 9,128.55 100.00% 9,128.55 9,128.55 100.00% -

A-1401 Medical expenses 564.32 564.32 100.00% 564.32 564.32 100.00% -

A-1402 Childhood centre 11,008.34 11,008.34 100.00% 11,008.34 11,008.34 100.00% -

A-1403 Social contacts 394.26 394.26 100.00% 394.26 394.26 100.00% -

Total 11,966.92 11,966.92 100.00% 11,966.92 11,966.92 100.00% -

A-1500 Training 33,117.81 15,227.44 45.98% 33,117.81 15,227.44 45.98% -

Total 33,117.81 15,227.44 45.98% 33,117.81 15,227.44 45.98% -

A-1603 IT support 14,604.00 14,285.00 97.82% 14,604.00 14,285.00 97.82% -

A-1604 Administrative assistance 59,263.00 59,082.37 99.70% 59,263.00 59,082.37 99.70% -

A-1611 Translation 14,440.85 14,126.60 97.82% 14,440.85 14,126.60 97.82% -

Total 88,307.85 87,493.97 99.08% 88,307.85 87,493.97 99.08% -

TOTAL - Title 1 142,521.13 123,816.88 86.88% 142,521.13 123,816.88 86.88% -

A-2020Water gas electricity and

heating20,000.00 18,520.83 92.60% 20,000.00 18,520.83 92.60% -

A-2030 Cleaning and maintenance 6,061.60 5,520.00 91.07% 6,061.60 5,520.00 91.07% -

A-2040 Security and surveillance 500.00 180.00 36.00% 500.00 180.00 36.00% -

A-2006 Fitting out of premises 2,260.40 2,036.34 90.09% 2,260.40 2,036.34 90.09% -

Total 28,822.00 26,257.17 91.10% 28,822.00 26,257.17 91.10% -

A-2100Acquisition renting of

equipments and software206,423.95 197,092.39 95.48% 206,423.95 197,092.39 95.48% -


equipments28,817.23 28,817.23 100.00% 28,817.23 28,817.23 100.00% -

Total 235,241.18 225,909.62 96.03% 235,241.18 225,909.62 96.03% -

A-2300 Stationery 591.58 205.00 34.65% 591.58 205.00 34.65% -

A-2301 Postage and delivery charges 465.21 212.31 45.64% 465.21 212.31 45.64% -

A-2302 Telecommunication charges 13,985.48 9,464.50 67.67% 13,985.48 9,464.50 67.67% -

A-2303 Legal expenses and damages 15,180.00 9,900.00 65.22% 15,180.00 9,900.00 65.22% -

A-2305 Bank charges 294.87 294.87 100.00% 294.87 294.87 100.00% -

A-2309 Other administrative expense 281.13 33.57 11.94% 281.13 33.57 11.94% -

Total 30,798.27 20,110.25 65.30% 30,798.27 20,110.25 65.30% -

A-2400 Official Journal 500.00 499.18 99.84% 500.00 499.18 99.84% -

Total 500.00 499.18 99.84% 500.00 499.18 99.84% -

A-2500

Organisation and travel

expense of Governing Board

meetings

58,357.20 45,423.52 77.84% 58,357.20 45,423.52 77.84% -

Total 58,357.20 45,423.52 77.84% 58,357.20 45,423.52 77.84% -

Total - Title 2 353,718.65 318,199.74 89.96% 353,718.65 318,199.74 89.96% -

496,239.78 442,016.62 89.07% 496,239.78 442,016.62 89.07% - TOTAL - Title 1 and Title 2


5. Explanatory notes to the report on the

implementation of the budget

5.1. Budgetary principles, structure and appropriations

Legal basis

Article 92(b) of the EIT Financial Regulation2 stipulates that “the accounts of the EIT shall co prise the financial statements of the EIT and the reports on the implementation of the budget of the EIT.

Budgetary principles

The budget of the EIT is governed by a number of basic principles:

unity and budget accuracy: all expenditure and revenue must be incorporated into a single budget

document, must be booked on a budget line and expenditure must not exceed authorised

appropriations;

universality: this principle comprises two rules:

o the rule of non-assignment, meaning that budget revenue must not be earmarked for

specific items of expenditure (total revenue must cover total expenditure);

o the gross budget rule, meaning that revenue and expenditure are entered in full into the

budget without any adjustment against each other;

annuality: the appropriations entered are authorized for a single year and must therefore be used

during that year;

equilibrium: the revenue and payment appropriations shown in the budget must be in balance;

specification: each appropriation is assigned to a specific purpose and a specific objective;

unit of account: the budget is drawn up and implemented in euro and the accounts are presented

in euro;

sound financial management: budget appropriations are used in accordance with the principle of

sound financial management, namely in accordance with the principles of economy, efficiency

and effectiveness;

transparency: the budget is established and implemented and the accounts presented in

compliance with the principle of transparency; the budget and amending budgets are published

in the Official Journal of the European Union.

2 EIT Governing Board Decision of 27 December 2013


Budget structure

The budget consists of a statement of revenue and expenditure. 132

The items of revenue and expenditure are classified according to their type or the use to which they are

assigned under titles, chapters, articles and items.

Structure of the budgetary accounts

General overview

The EIT budget contains administrative appropriations and operating appropriations. Furthermore, the

budget distinguishes between two types of appropriation: non-differentiated appropriations (NDA) and

differentiated appropriations (DA).

Non-differentiated appropriations are used to finance operations of an annual nature (which comply with

the principle of annuality). They cover all the administrative items of the budget. In the case of non-

differentiated appropriations, the amount of commitment appropriations is the same as that of payment

appropriations.

Differentiated appropriations were introduced in order to reconcile the principle of annuality with the need

to manage multi-annual operations. They are intended to cover multi-annual operations and comprise all

appropriations in Title 3.

Differentiated appropriations are split into commitment and payment appropriations:

– commitment appropriations: cover the total cost of the legal obligations entered into for the current

financial year for operations extending over a number of years. However, budgetary commitments for

actions extending over more than one financial year may, in accordance with Article 69(4) of the EIT

Financial Regulation, be broken down over several years into annual instalments where the basic act so

provides or where they relate to administrative expenditure.

– payment appropriations: cover expenditure arising from commitments entered into in the current

financial year and/or earlier financial years.

Origin of the appropriations

The main source of appropriations is the Union's budget for the current year. However, there are other

types of appropriations resulting from the provisions of the EIT Financial Regulation. They come from

previous financial years or outside sources:

Initial budget appropriations adopted for the current year can be supplemented with transfers between

lines in accordance with the rules laid down in Articles 27 of the EIT Financial Regulation and by

amending budgets (covered by Article 34 of the EIT Financial Regulation).

EIT transfers: transfers decided by the EIT Director on its own authority in accordance with Article

27(1) of EIT Financial Regulation

GB transfers: transfers decided by the Governing Board in accordance with Article 27(2) of EIT

Financial Regulation

Appropriations carried over from previous year or made available again also supplement the current

budget. These are

non-differentiated appropriations which may be carried over automatically for one financial

year only in accordance with Article 14(5) of the EIT Financial Regulation;


appropriations carried over by decision of the EIT Governing Board in accordance with Article

14(3) and (4) of the EIT Financial Regulation;

appropriations not used and available at 31 December of the financial year arising from

assigned revenue in accordance with Article 15 of the EIT Financial Regulation.

Appropriations re-entered from previous years also supplement the current budget. These are

Differentiated commitment appropriations not used and available at 31 December of the

financial year and re-entered by decision of the EIT Governing Board

Payment appropriations not used and available at 31 December of the financial year and re-

entered by decision of the EIT Governing Board

Assigned revenue which is made up of

appropriations made available again as a result of repayment of payments on account: These

are mainly EIT grants which have been repaid by the Knowledge and Innovation Communities

(KICs).

Outstanding commitments (RAL)

With the introduction of differentiated appropriations, a gap developed between commitments entered

into and payments made: this gap, corresponding to outstanding commitments, represents the time-lag

between when the commitments are entered into and when the corresponding payments are made.

5.2. Explanation of the budget result (Table 1)

The amounts of EU subsidy and Host Member State contribution entered in the accounts are those credited

in the course of the year to the EIT accounts. The other revenue entered in the accounts is the amount

actually received in the course of the year.

For the purposes of calculating the budget outturn for the year, expenditure comprises payments made

against the year's appropriations for payments plus any of the appropriations for that year that are carried

over to the following year. Payments made against the year's appropriations for payments mean payments

that are made by the accounting officer by 31 December of the financial year.

The budget result consists the difference between:

- all the revenue collected in respect of that financial year

- the amount of payments made against appropriations for that financial year increased by the

amount of the appropriations for the same financial year carried over and/or re-entered.

The difference referred to above is increased or decreased

- by the net amount of appropriations carried over and re-entered from previous financial years

which have been cancelled and,

- by the balance resulting from exchange gains and losses during the financial year, both realised

and non-realised.

The payment appropriations carried over and re-entered include: automatic carryovers and carryovers

and/or re-entering by decision. The cancellation of unused payment appropriations carried over from the

previous year shows the cancellations on appropriations carried over automatically and by decision as well

as the re-entered by decision. It also includes the assigned revenue appropriations carried over.


5.3. Explanation of the reconciliation of the budget and economic result (Table 2)

The economic result of the year is calculated on the basis of accrual accounting principles. The budget

result is however based on modified cash accounting rules, in accordance with the EIT Financial Regulation.

As the economic result and the budget result both cover the same underlying operational transactions, it

is a useful control to ensure that they are reconcilable.

Reconciling items - Revenue

The actual budgetary revenue for a financial year corresponds to the revenue collected from entitlements

established in the course of the year and amounts collected from entitlements established in previous

years. Therefore the entitlements established in the current year but not yet collected are to be deducted

from the economic result for reconciliation purposes as they do not form part of budgetary revenue. On

the contrary the entitlements established in previous years and collected in current year must be added to

the economic result for reconciliation purposes.

The net accrued revenue mainly consists of accrued revenue for XX and interests. Only the net-effect, i.e.

accrued revenue for current year minus reversal accrued revenue from previous year, is taken into

consideration.

Reconciling items - Expenditure

The net accrued expenses mainly consist of accruals made for year-end cut-off purposes, i.e. eligible

expenses incurred by KICs but not yet reported to the EIT. While accrued expenses are not considered as

budgetary expenditure, payments made in the current year relating to invoices registered in prior years are

part of current year's budgetary expenditure.

The net effect of pre-financing is the combination of (1) the new pre-financing amounts paid in the current

year and recognised as budgetary expenditure of the year and (2) the clearing of the prefinancing paid in

current year or previous years through the acceptance of eligible costs. The latter represent an expense in

accrual terms but not in the budgetary accounts since the payment of the initial pre-financing had already

been considered as a budgetary expenditure at the time of its payment.

Besides the payments made against the year's appropriations, the appropriations for that year that are

carried to the next year also need to be taken into account in calculating the budget result for the year. The

same applies for the budgetary payments made in the current year from carry-overs and the cancellation

of unused payment appropriations.

The movement in provisions relates to year-end estimates made in the accrual accounts (employee

benefits mainly) that do not impact the budgetary accounts. Other reconciling amounts comprise different

elements such as asset depreciation, asset acquisitions, capital lease payments and financial participations

for which the budgetary and accrual accounting treatments differ.


ANNEX TO THE ANNUAL ACCOUNTS


LIST OF THE EIT GOVERNING BOARD MEMBERS 2016

The Governing Board is the principal governing body of the EIT entrusted with the role of strategic

leadership and the overall direction of the operational activities implemented by the EIT Headquarters.

It is independent and autonomous in its decision-making and is responsible for the selection, evaluation

and support of the Knowledge and Innovation Communities (KICs).

The Governing Board brings together 12 high-calibre members balancing prominent expertise from the

higher education, research, business and innovation fields.

Name Function

NAGEL Rolf P. Appointed GB Member

VAN DEN BERG Dirk Jan Appointed GB Member

GARANA María Appointed GB Member

TRBOVIĆ Ana S. Appointed GB Member

KERAVNOU-PAPAILIOU Elpida

Appointed GB Member, Executive Committee Member

KOLAR Jana Appointed GB Member, Executive Committee Member

MAKAROW Marja Appointed GB Member

OLESEN Peter Appointed GB Member, Chairman of GB

PRENDERGAST Patrick Appointed GB Member

REVELLIN-FALCOZ Bruno Appointed GB Member, Executive Committee Member

LAKATOS Péter Appointed GB Member

NILSSON Björn O. Appointed GB Member

EIT INTERIM DIRECTOR: Martin Kern


ESTABLISHMENT PLAN 2016

Permanent posts

Temporary Posts

Permanent posts

Temporary Posts

Permanent posts

Temporary Posts

Permanent posts

Temporary Posts

AD 16

AD 15

AD 14 1 1

AD 13AD 12AD 11 1 1 1 1AD 10AD 9 7 5 5 4

AD 8 6 5 8 5

AD 7 9 8 5 5

AD 6 10 13 14 11

AD 5AD total 34 32 34 26

AST 11AST 10AST 9AST 8AST 7AST 6AST 5 1 1 1 1

AST 4 3 2 2

AST 3 1 1 2 3AST 2AST 1

AST total 5 4 5 4GRAND TOTAL 39 36 39 30

Function group and grade

2016 2015

Authorised under the Community Budget

Filled as of 31/12/2016Authorised under the Community Budget

Filled as of 31/12/2015

02517.eit.2017.i.gb46 decision 15/2017 of the governing ... · knowledge and innovation communities...

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